Another billion in the hole

Another billion in the hole

The state's descent to the bottom is picking up speed.

Illinois is in desperate financial straits.

Readers have heard that before in this space, perhaps so many times that the words have lost their meaning.

But hang on for just a moment, because as hard as it may seem, circumstances looks like they are getting even worse.

Not only is the state continuing to hemorrhage money in the wake of the 18-month-old budget standoff between Republican Gov. Bruce Rauner and Democratic House Speaker Michael Madigan, but revenue projects are falling short of anticipated receipts.

The General Assembly's Commission on Government Forecasting and Accountability recently reported that "with half of the fiscal year completed, base receipts are off $865 million, or 6.1 percent."

That means that not only is Illinois continuing to spend more money than it brings in, but that it's bringing in even less in projected tax revenues.

"Embedded within the overall falloff of 6.1 percent — of which a large part is due to a drop of $290 million or 22.4 percent in federal sources — is the combined drop of 4.5 percent from the 'Big Three' (gross personal, gross corporate and sales)."

Declines in those important tax categories mean that people and businesses are earning less and, as a consequence, paying less in personal and corporate income taxes. Because their incomes are stagnant, they haves less disposable income, and as a consequence, have reduced their spending, and as a consequence, are not paying as much as sales tax.

How bad is that news? It's really bad, but perhaps terrible if past is prologue.

The COFGA report states that "perhaps most unsettling is that the last time the Big Three experienced a combined decline during the during half of a fiscal year (absent tax rate changes) was during the recessionary years impacting FY 2009 and 2010," when economic growth either was non-existent or highly negative.

In other words, the numbers are similar to those of the recession.

But the United States is not in a recession. Economic growth is not what the public would like it to be, and President-elect Donald Trump has vowed to make jump-starting the economy his top priority. But slow growth is not negative growth.

Further, other midwestern states are doing well.

So why would Illinois be experiencing what the COFGA report described as a "troubling revenue performance thus far in FY 2017"?

It's impossible to say for sure.

But there's fertile ground for speculation.

Maybe it has something to do with a state so shabbily run that 47 percent of residents say they wish they lived elsewhere.

Maybe it has something to do with the fact that for years, higher-income earners have left Illinois and been replaced by lower-income earners.

Maybe it has something to do with the fact that the vast majority of the people in Illinois think the state is headed in the wrong direction.

Maybe it has something to do with the fact that the political class, the people in charge, have for more than 20 years consistently spent more money than the state brought in, running up billion-dollar budget deficits, not paying more than $10 billion in bills to state vendors and presiding over a public pension system that is underfunded by $130 billion.

And maybe it has something to do with a dysfunctional political system in which the overwhelming majority of state legislators stand passively by while Madigan and Rauner bang heads on the budget issue.

A once-proud state has been brought to its knees and is effectively insolvent because Democrats and Republicans can't bring themselves to work out a compromise agreement on issues related to spending, taxing and building a business climate more attractive to job creators.

The question isn't just how bad things have to get before our elected officials wake up. Instead, it's whether the current situation is salvageable even if the Democrats and Republicans suddenly got religion and decided to work together for the common good.

The COFGA report is more bad news. But there's been bad news before, and it hasn't mattered much. Instead, the poisonous status quo has weathered all storms and continued to stand tall.

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