Illinois Debt: A Report on Fixing the Problem
SPRINGFIELD, Ill. (IRN) – The state’s financial situation is so dire that any recovery plan that’s the least bit realistic will be unpleasant. That’s the ugly truth from the Institute of Government and Public Affairs at the University of Illinois, which looked at what it would take.
How’s this: Keep the income tax increase in effect (most of the 2011 tax increase will expire at the end of 2014 unless lawmakers act to extend it), keep education and Medicaid spending flat, and cut everything else by 6 to 9 percent.
Economist Richard F. Dye says that gets us in the black by 2019. “Politically it is very ambition, but it is definitely in the magnitude of what we think that, in addition to keeping the tax increase that was voted just a year ago from expiring, that could help us achieve structural balance in the state,” he said.
Dye cautions that keeping Medicaid spending flat will be hard, because its costs have risen faster than inflation for decades.
Dye says Illinois residents will for a while be in a situation where they are paying more in taxes than they get out of government, which is an uncomfortable situation: paying taxes now, for example, for a teacher who has retired but the state didn’t set aside the money for her pension.
The state’s operating budget is close to balanced, Dye said, but the state has $8.1 billion in unpaid bills, according to the state comptroller, and more than $80 billion in unfunded pension obligations.
Copyright Illinois Radio Network