Illinois’ outstanding debt moves like the hour hand of a clock, ticking imperceptibly but steadily.
If each of the roughly 6 million Illinoisans who file income taxes in the state had to pay his or her share of the state’s budget shortfall, the bill today would be $45,500 per taxpayer. This new data was released Sept. 17 in a report issued by the State Data Lab, a project of the nonpartisan tax watchdog Truth in Accounting.
Sheila Weinberg, a certified public accountant and founder and CEO of Truth in Accounting, said TIA’s numbers were pulled from the state’s June 30, 2015, audited comprehensive annual financial report. The state does not report the unfunded pension and retirees’ health care debt on its balance sheet, however.
The report suggests that Illinois has approximately $213 billion worth of expenses, but only $26 billion in the bank to pay them. That leaves a balance of $187 billion. TIA’s figure on a per-taxpayer share has increased by $500 for each Illinois taxpayer over the past year.
The report also revealed the state has $116.7 billion of pension debt, but says that only $108.6 billion of that is being reported by state officials. These debts are factors in Illinois, which has the third-worst debt among all states — behind only New Jersey and Connecticut — having received “sinkhole” status from TIA.
“Our biggest concern is that the state has not been truthful to the citizens about the amount of its debt. While elected officials have claimed balanced budgets, the debt has been increasing because it has been hidden,” Weinberg said.
Rich Carter, spokesman for the Comptroller Leslie Munger, said the state uses daily numbers only to calculate what is on the table and what is in the coffers. Munger’s office uses what is called the bill backlog, then the general revenue fund — the account from which most bills are paid.
“As of Sept. 21, the state has a bill backlog of $8.823 billion,” Carter said. “We started the day with 87,849 vouchers that we have no money to pay. When a voucher comes into the Comptroller’s Office, it gets in line to be paid, unless it is expedited by court order or statute. Today, we are paying vouchers we received on June 6. Those vouchers are 76 working days in arrears, so they are being more than 3½ months after we received the voucher from a state agency.
“On average, the state receives about $100 million each day to pay the bills. Expenses are much more. The state is currently running a $400 million to $500 million monthly operating deficit. As a result, we are projecting the bill backlog will exceed $10 billion by Dec. 31 and payment delays will increase to six months,” he said.
Carter said the comptroller explains the bill-paying function as there are $8,800 worth of bills sitting on the table with $115,000 in credit card statements the state owes, which represents the state’s unfunded pension liability. But there’s only $100 coming in every day in her scenario.
“If there’s a day where (Munger) has to make pension payments, which are more than $500 million per month, then some other bills have to wait,” Carter said. “If it’s the day we cut payroll as ordered by the courts or have to make a debt payment as required by the statute, those must be paid first.
“Every day, we perform triage with the limited funds we have to pay what’s required by the courts and the statutes while trying to keep our most vulnerable human services organizations afloat,” he said.
Carol Portman, president of the Taxpayers Federation of Illinois, said taxpayers should realize that all of the debt isn’t due right away.
“Those numbers are mind-boggling and jaw-dropping,” Portman said. “The debt has been growing the past few decades, and with the budget standoff, it has been getting worse. There’s a principle that revenue should equal spending, and without tax revenue to back it up, the numbers have been getting worse.
“The biggest piece is the pension that’s been increasing over time. The state has finally admitted to the problem and is trying to come up with a rational plan to address it,” she said.
Weinberg said the first step in alleviating the taxpayer load for the debt is for government officials to be truthful and transparent about the government’s finances.
“Budgets need to be ‘balanced,’ including the true cost of government, and the state’s balance sheet needs to include all of its pension and retiree health care debt,” Weinberg said. “The state should balance its budget using ‘fact’-based budgeting, meaning ‘full accrual calculation and techniques.’ ”
Portman said there have been many tax proposals floating about to help close the gap between revenue and expenditures by the state, and they are fairly common for counties and municipalities to authorize, such as a 1-cent sales tax.
“The federal government has debt, state governments has debt and one problem in Illinois for many years is that the state has spent more money than it’s brought in, but the spending was done in such a way that it’s been deferred,” Portman said. “So these large numbers are a reflection of the total of all those years spent deferring payments. We need to get the economy to grow versus taxing more.”
But it isn’t just the state that’s having difficulty either, Weinberg said.
“Most cities and villages have very large pension and retiree health care debt,” Weinberg said.
“The government’s unrestricted assets dropped from negative $36.6 million to negative $401.1 million. This represents the amount of money the city needs to pay the bills it has accumulated to date, including pension debt. This is almost two times the amount of the city’s annual revenue.”
One concern for state taxpayers is that government employees — those belonging to the American Federation of State, County and Municipal Employees group — have a median salary of $63,660, compared with $32,000 in the private sector. U.S. Census Bureau data states the median income for an individual AFSCME worker is higher than the median income for an entire household in the private sector.
Portman said that many of the lower-wage jobs performed by government employees are now hired out to agencies that are private-sector employers, which may be the reason behind that difference in income.
“The folks left at the government are higher-management types or in a union, so their salaries are higher,” Portman said. “The cost of living is also higher in Illinois.”
U.S. Census Bureau data shows that in 2014, the median household income in Illinois was $57,444, compared with the national average of $53,657.
Editor’s note: This story was updated on Sept. 28, 2016.
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