A new Illinois income tax increase means workers soon will see 1.2 percent more taken out of their paychecks, but even that money isn’t going to be enough to completely straighten out state government’s finances.
The state still has unpaid bills hovering around $15 billion, and that number could rise as more come in with the fog of the record-setting budget impasse lifting. There are cash flow issues that mean covering monthly expenses remains a challenge, at least for a while. And a whopping $130 billion shortfall in government worker pension systems has not been addressed, with the options for doing so limited by the courts.
Then there are the costs that are more difficult to quantify. Public universities that went without regular payments tapped into reserves and laid off workers, and now are being asked to cut even more as they struggle to attract students. Those who care for the sick, the elderly and the disabled say it will take years to rebuild the state’s social safety net, which was decimated by closures of nonprofit agencies across the state that couldn’t weather a lengthy payment drought.
Meanwhile, at least one Wall Street agency warns the budget fix may be too little, too late, signaling that the state’s credit rating may still be cut to junk status due to the broad financial problems that are still unsolved. That could make one path toward stabilizing the state’s finances — borrowing — more expensive than initially planned.
Taken together, it means Illinois government has a long way to go before its finances may be considered sound, even as taxpayers pony up more.
“It’s an issue of tempering people’s expectations,” said Democratic Comptroller Susana Mendoza, whose office is in charge of paying the bills. “The general public may think ‘Oh, you have a budget, everything should be perfect,’ but it’s far from that. This stops the hemorrhaging, but now it’s an issue of stabilizing.”
Spending went largely unchecked during the two years state government operated without a budget amid fighting between Republican Gov. Bruce Rauner and Democratic House Speaker Michael Madigan. A series of laws, one-time agreements and court orders meant money kept going out the door. And the Rauner administration continued to sign contracts, whether or not the money was there to pay for it. The state’s backlog of bills is now around $15 billion, almost triple the amount when Rauner took office in January 2015.
That caused major cash flow problems for Mendoza’s office, which has had to juggle the state’s obligations to make payments without enough money on hand. While the budget plan eventually is expected to provide some relief in the form of an…