Although Illinois’ next gubernatorial election is more than a year away, the race is already heating up — as is the specious rhetoric about the state’s budget woes.
Indeed, nothing is quite as predictable as a candidate for governor misrepresenting Illinois’ fiscal problems in an effort to gain votes by playing on widely held misconceptions. Case in point: recent comments made by former state Sen. Paul Schimpf, who is seeking the Republican nomination.
During a recent interview, Schimpf lamented the state’s ongoing general-fund deficits. Hard to argue with that. According to the comptroller’s office, Illinois has run a deficit in its general fund for the last 17 consecutive years. This year, the deficit is projected to exceed $6 billion. It’s going to be significantly worse in a couple of years when the federal pandemic relief money that’s propping up the current budget runs out.
These ongoing, worsening deficits are a real cause for concern, since over 90 percent of general-fund spending on services goes to the four core areas of education, health care, social services and public safety.
Unfortunately, Schimpf blames these deficits on Illinois’ inability to get its spending under control, claiming that while taxes are an issue, “state officials need to focus on the spending problem first” by either cutting expenditures or at least “holding the line” on them.
Sure, that’s great posturing that will appeal to most Republican primary voters. It also happens to not be supported by the facts. Worse, it continues a long-running, spurious trope about state spending being profligate that has consistently frustrated legitimate efforts to actually solve the problem.
Let’s start with the claim that spending on services is the cause of the state’s ongoing deficits. The data are completely at odds with this contention, and instead show that Illinois has cut real general-fund spending on nearly every core service since fiscal year 2000. Indeed, after adjusting for changes in inflation and population, general-fund spending on services in the current fiscal year is scheduled to be at least 20 percent less than it was two decades ago. That’s a meaningful cut — which might be justifiable if Illinois were a profligate spending state. But it isn’t.
According to the National Association of State Budget Officers, Illinois ranks 33rd among all states in spending on services per capita, despite having the sixth largest population. Meanwhile, Illinois ranks 43rd in spending on services as a percentage of state GDP, despite having the fifth-largest economy. In fact, no matter how you slice the data, when it comes to investing in public services, Illinois is a low-spending state that has been cutting its real spending for decades.
So how’s it possible that Illinois continues to run huge general-fund deficits given its long-term cuts to core services? Again, the data make the answer clear. First and foremost, the state’s tax policy is so flawed in design that it doesn’t work in the modern economy. Hence it regularly fails to generate the revenue growth needed to cover the cost of providing the same level of services from one fiscal year to the next. This is known as a “structural deficit,” and it means even when no public-service programs are added or increased, the state’s deficit grows annually.
Second, to make matters worse, elected officials in both parties approved the irresponsible practice of underfunding the required contributions owed to the state’s pension systems for decades. They did this to maintain some of the spending on services that revenue growth was not covering because of the structural deficit. Effectively, this meant the state was borrowing from the pension contributions to pay for services.
Bottom line: Illinois can’t afford more groundless rhetoric. It needs political leadership that’s willing to face facts and reform tax policy in a manner that raises enough revenue to eliminate the structural deficit and support current service expenditures.