Illinois’ long-term financial woes won’t be long term forever.
When is a negative reported as a positive?
In at least one instance, it’s when the subject of the state of the State of Illinois’ finances comes up.
The budget picture, according to a financial report for the fiscal year ending in June 30, 2020, is bleak. But it would have been even bleaker without billions of dollars in bailouts from the federal government.
“Buoyed by federal COVID pandemic aid, Illinois’ cash position improved in fiscal 2020 while pensions and other obligations pushed the state’s net position of governmental activities deeper in the hole,” reports the Bond Buyer’s Yvette Shields.
The good news about the bad news is that “the state trimmed $1.1 billion off its general fund deficit ... to negative $6.4 billion at fiscal 2020 year close,” Shields reports.
So instead of spending $7.5 billion more than the state brought in, Illinois only spent $6.4 billion more than it brought in.
Of course, the 2020 fiscal year was an outlier, state tax revenues collapsing in the face of the coronavirus pandemic and subsequent restrictions placed on life are business as usual.
But while the federal aid provided extra cash for state officials to use to supplement another deficit state budget, Illinois’ overall financial picture darkened considerably.
What Shields characterized as “pension and other obligations” continue to grow into an increasingly intolerable and unmanageable burden.
The Bond Buyer reports that Illinois’ net financial position “worsened by $4.7 billion and now stands at $197.8 billion.” That means Illinois needs $197.8 billion to cover future obligations.
That’s not just an unfathomable sum for Illinois to handle, it’s also very likely the real number is considerably higher.
Of the $197.8 billion, a significant portion comes from pension underfunding that is calculated by government accounting standards. If the standards applied to private-sector pension systems were applied to Illinois’ five public pensions, the number would be much higher.
The net cash position number illustrates the failure of Illinois’ past and current elected leadership to manage taxpayer dollars in a responsible fashion.
The latest report shows debt numbers heading in the wrong direction.
The net position of $197.8 billion at the end of 2020 represents another in a series of declines.
The Bond Buyer reports Illinois’ net position has “steadily declined over the years.” It jumped from $131.6 billion in fiscal 2016 to $182.6 in fiscal 2017 to $189.1 billion in 2018. Now it’s approaching a $200 billion financial hole, and that’s a hurdle Illinois appears destined to clear at the end of fiscal year 2021.
Of the 50 states, only New Jersey — net position $201.5 billion — is in a worse financial hole than Illinois.
The big question, of course, is where is this headed and how long will it take?
The powers that be have shown no interest in doing anything other than passing one spending program after another. They must believe that somehow God will provide.
That’s a nice thought. But here’s another — God helps those who help themselves, and the governor and legislators appear uninterested in doing anything other than raising taxes and then spending even more money than their tax increases generate.
At the same time, they ignore the “pensions and other obligations that steadily rise.”
Federal bailouts or not, this is a prescription for financial failure on a grand scale. Some people might not want to believe it, but the numbers don’t lie.