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State billions in the red; tough budget anticipated

The State of Illinois owes an estimated $8.5 billion in overdue bills, Illinois Comptroller Judy Baar Topinka reported last week.
Kay Shipman 
Published: Jan 23, 2012
“One year after Illinois raised individual and corporate income tax rates, the state remains in a precarious fiscal position with persistent payment delays -- and the situation is unlikely to significantly improve in the near-term,” Topinka wrote.

A major question about the state’s fiscal crisis will remain unanswered until the General Assembly passes a new budget, said Kevin Semlow, Illinois Farm Bureau director of state legislation.

“There has been no clear plan presented to address the backlog of bills –- and the ongoing increasing costs of pensions, Medicaid, and other operating costs,” Semlow said. “That is expected to be the focus of the governor’s Feb. 2 State of the State Address and the Feb. 22 budget message.”

According to Topinka, higher income tax rates and increased consumer spending led to a rise in state revenue. For the first six months of fiscal year 2012, individual income revenue increased $2.6 billion or 65.9 percent while corporate income tax revenue increased $180 million or 24.1 percent.

At the same time, sales tax revenue grew by $202 million or 5.8 percent compared to the previous year. Meanwhile, federal revenue has dropped by $1.636 billion or 55.2 percent, primarily due to a decrease in the federal reimbursement rate for Medicaid payments.

On the spending side, general state spending has decreased in total by $1.057 billion or 6.5 percent through the second quarter of the fiscal year. Topinka speculated base spending “will probably increase dramatically for the rest of the year.” She pointed to higher spending for Medicaid and a “surge” in state employee pension spending in the third quarter.

“It is the obligation of the General Assembly to approve a state budget. We anticipate that is what legislators’ focus will be in the spring session,” Semlow said.


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