So Much Worse Than We Know
We are in a world of hurt.
Period.
PAY-LATER BUDGETING is our term for Illinois’ persistent practice of spending more than the inflow of taxes and other sustainable revenue can cover. Call it what you will—spending more than we can afford; borrowing; putting it on the tab; kicking the can down the road; sending the bill to our kids; letting some future governor and General Assembly deal with it; ducking the check—it is the source of the state’s fiscal problems.
For years Illinois has been spending much more than could be supported by sustainable sources of revenue and covering the deficit by issuing IOUs.
New projections from the Fiscal Futures model put the magnitude of the underlying deficit at $9 billion for FY 2016—and growing thereafter. The accumulated value of all the IOUs issued to pay for past deficits now totals $159 billion. These IOUs represent claims on the state that when paid off will crowd-out spending on other priorities.
Still feeling good about what you are hearing out of Springfield?
Well, try this on:
Illinois’ fiscal problems are huge and have been developing for decades. It will take a combination of painful public policies and at least several years to restore fiscal balance in Illinois. Illinois’ fiscal problems are so large and have been developing for so long that one single policy option will not be enough to solve them.
Solving Illinois’ fiscal problems requires a combination of spending cuts and revenue increases.
Changes in awareness, expectations, and policy are needed to restore fiscal balance in Illinois. Being saddled with paying past years’ bills means that today, Illinoisans must reduce their expectations for the services that they can expect from government and be prepared to pay more for government services, now and in the future.
Decision makers need to understand—and act on—the fact that pay-later financing hurts citizens in future years. Illinois needs a long-term financial plan to address this problem—and the fiscal discipline that it will take to adhere to that plan—for many years.
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Good heavens. What a mess.
Out for now.......
Matt
