How low can Illinois go?
When experts don’t know much for sure, they can’t say much for sure.
That’s why a report prepared for state policymakers by the University of Illinois’ Institute for Government and Public Affairs posits numerous scenarios regarding the impact of the coronavirus pandemic but doesn’t provide much in specifics beyond negative prophecies.
“The COVID-19 pandemic has caused upheaval in the U.S. economy, but there is great uncertainty about the depth and duration of the pandemic,” states the report prepared by a group of academics.
It focuses on three areas — economic and fiscal impact, community and family resilience, and the health care work force.
Its dire forecasts restate those of both public and private analysts at the state’s Commission on Government Forecasting and Accountability and the Wirepoints website.
The report predicted “tax revenue will plummet,” that there will be more spending required to support “vulnerable populations” in public health and economic assistance, that Illinois’ already compromised public pensions will “significantly deteriorate” and that municipal governments’ finances shrink.”
“To date, federal legislative efforts ... have been massive but are unlikely to fully insulate Illinois from the fiscal damage,” the report states.
Just how much damage will be caused won’t be known until the pandemic has passed. But the report said the pandemic will have “significant short- and long-term economic consequences.”
One short-term problem is related to the now-required rewrite of Gov. J.B. Pritzker’s proposed $42 billion budget. His original plan, one prepared prior to the pandemic, now is out the window.
Here’s the dilemma he and legislators face — “revenue will almost certainly fall substantially and expenditures will grow.”
Illinois’ public pensions are only 40 percent funded, meaning they have “only 40 cents for every $1” in liabilities.
The report said “recession-induced declines in asset values could result in a sharp and sudden increase” in unfunded liabilities. That could require “increased pension contributions,” making even less money available for the state to fund core state functions like highways, law enforcement and education.
The cascading effect of the ongoing economic shutdown is leaving no aspect of American society unaffected. Obviously, those most vulnerable are those individuals and government at all levels who have to fewest resources to take the hard health and economic hit the pandemic represents.
That’s why it’s most important to aggressively address the health issues so that the country can get back to what passes for daily economic life.
As matters now stand, it’s the worst of both worlds — a public-health pandemic and an economic freeze.
The only hope one can draw from the report is that its least-worst-case scenarios come about rather than its worst-case scenarios. Pandemic prognosticators have consistently erred on the high side in terms of predicting disaster. Circumstances clearly are bad, but maybe not as bad as some experts contend.