IIFS Blog

04.11.14

Illinois Delays Submission of $5 Billion Medicaid Plan

Despite a scheduled submission date of March 12, 2014, the State of Illinois has not yet filed an application to use more than $5 billion in new federal funding over five years to overhaul its Medicaid program. The delay was mentioned by State officials on April 9 at a hearing before the House...

04.04.14

Rhode Island’s Landmark Pension Reforms Could Be Adjusted Under Proposed Settlement Agreement

As the legal battle over Illinois’ new pension law continues, courts continue to issue rulings on similar pension changes in other states. Last month, Governor Lincoln D. Chafee, General Treasurer Gina M. Raimondo, and the Federal Mediation and Conciliation Board signed off on a settlement...

03.28.14

Illinois Governor’s Recommended FY2015 Budget Extends Income Tax Increases

On March 26, 2014, Governor Pat Quinn presented an FY2015 budget proposal for the State of Illinois that avoids a fiscal cliff by retaining temporary income tax increases that were scheduled to be phased out beginning in January 2015. The Governor’s recommended budget also significantly...

03.20.14

Governor’s FY2015 Budget Recommendation Faces Illinois' Steep Revenue Cliff

Next week Governor Pat Quinn will give his sixth budget address since taking office in 2009. The budget is expected to be one of the most difficult of his tenure considering that the State is currently expected to have approximately $5.4 billion in unpaid bills at the end of FY2014 and will see a...

03.17.14

Cost of Illinois' Retirement Income Tax Exemption

Unlike the federal government, the State of Illinois exempts all retirement income from the individual income tax. Of the 41 states that impose an income tax, Illinois is one of only three that exempt all pension income and one of 27 that exclude all federally taxed Social Security income,...

03.05.14

Long-Term Financial Plan Recommended for State of Illinois

In its recently released FY2015 budget roadmap report, the Institute for Illinois’ Fiscal Sustainability at the Civic Federation recommended that the State of Illinois publish a five-year financial plan and that the plan be updated annually. This recommendation follows a best practice of the...

02.28.14

Legislative Revenue Estimate Shows Size of Illinois' Fiscal Cliff

The Illinois House of Representatives has approved a revenue projection for the coming fiscal year that includes a $2.2 billion loss in operating resources for FY2015, after a holding series of committee meetings to deliberate varying estimates. The General Funds revenue estimate totaling $34.5...

02.20.14

Illinois Law Requires New Revenue Diversions from General Funds in FY2015

It is widely known that the State of Illinois faces a dramatic reduction in general operating revenue starting on January 1, 2015, when temporary income tax rate increases enacted in 2011 are scheduled to partially roll back. General Funds income tax receipts will also decline around the same time...

02.14.14

Improved Revenue in Current Year Means Steeper Cliff to Come

At a recent committee hearing, Illinois lawmakers were provided with a mixed message regarding the economy and State budget for the coming fiscal year. Officials from the Illinois Department of Revenue explained that although the State could expect improved underlying economic growth in the next...

02.06.14

Rhode Island Pension Reform: Two Years Later

In the fall of 2011, the Rhode Island General Assembly passed and Governor Lincoln Chafee signed landmark pension reform legislation intended to end a pension funding crisis and make retirement obligations for public employees more sustainable for the state and many local governments. To learn more...

01.29.14

Actuarial Reports Show Illinois' Savings from Pension Reform Law

The State of Illinois’ new pension law is expected to reduce statutorily required State contributions by $144.9 million over 30 years and lower its unfunded pension liability by about $24 billion, according to actuarial reports from the largest retirement systems. An analysis of the actuarial...

01.23.14

Illinois to Seek $3.25 Billion in New Federal Medicaid Funding from Waiver Plan

The State of Illinois hopes to receive approximately $3.25 billion in new federal Medicaid funding under a proposal to be submitted to the federal government in March. The estimated amount of new federal funding in the State’s comprehensive waiver proposal was discussed at a General Assembly...

01.17.14

Illinois Pledges Additional Pension Funding Under New Law

Although the most significant change in Illinois’ new pension law consists of a reduction in annual benefit increases paid to current and future retirees, the legislation also requires the State to commit additional funding to the retirement systems through a series of supplemental payments...

01.10.14

Governor's Budget Projection Shows Illinois' Continuing Financial Woes

Despite savings from recently enacted pension reforms, the State of Illinois’ finances could still worsen considerably after income tax increases are partially phased out as scheduled beginning in 2015, according to a report by Governor Pat Quinn’s office. The three-year general...

01.03.14

States Face Legal Challenges Over Reduced Pension COLAs

States inevitably face lawsuits when they attempt to ease budgetary pressures by cutting pension payments to current employees and retirees. While the legal battle over Illinois’ new pension law has just begun, courts have already issued rulings on similar pension changes in other states....

12.26.13

2013 Year in Review on the Institute for Illinois’ Fiscal Sustainability Blog

The following posts were among the most highly read on the Institute for Illinois’ Fiscal Sustainability’s blog in 2013 and represent some of the most closely followed Illinois fiscal issues this year: Analysis of Pension Reform Proposal Shows Significant State Savings January 3, 2013...

12.20.13

General Assembly Hears Plans for Illinois Medicaid Waiver

On December 18, 2013, the Illinois General Assembly held its first hearing on the plan to apply for a federal waiver to overhaul the State’s Medicaid program. State officials plan to submit an application to the federal government by the middle of February 2014. A draft of the proposal—...

12.12.13

How the Illinois Pension Plan’s Annual Benefit Increase Affects Current Employees

The pension plan enacted by the State of Illinois on December 5, 2013 may preserve more of the benefit increases for current employees than is widely assumed, due to a provision of the new law that ties benefit growth to inflation. As discussed here, the new benefit increase is based on years of...

12.06.13

Illinois Pension Overhaul Features Lower Benefit Increase

After decades of dire warnings and several years of legislative negotiations, the Illinois General Assembly on December 3, 2013 passed comprehensive pension reform legislation and Governor Pat Quinn signed it into law on December 5. The legislation is designed to scale back the State’s...

12.06.13

Op-ed: Why this pension deal is good for Illinois taxpayers

The following opinion piece by Civic Federation President Laurence Msall was published by Crain's Chicago Business on December 4, 2013. Decades of dire warnings and several years of legislative negotiations culminated yesterday afternoon with the passage of comprehensive state pension reform...

11.26.13

General Assembly Action on Pension Changes Possible Next Week

Legislative action on reducing the State of Illinois’ massive pension obligations could come as soon as next week, but the details of the latest pension reform proposal and its potential impact on the State’s financial condition have not yet been made public. On November 25, Illinois...

11.22.13

State of Illinois Level Principal Rule Helps Keep Total Debt Cost Low

A provision of the General Obligation Bond Act in Illinois requires the State to structure its bonds so that equal amounts of the funds borrowed are repaid in each year of the loan. This structure, called level principal, benefits the State’s long-term debt profile by reducing the overall...

11.18.13

Illinois Revenue Projections Continue to Climb After Early Sales Tax Gain

Only four months into the State of Illinois’ 2014 fiscal year, which began on July 1, 2013, annual revenue projections have increased by more than $300 million from the initial estimates. Positive first quarter results from the State’s sales tax receipts are being added to other one-...

11.14.13

Illinois to Seek Federal Waiver for Medicaid Overhaul

The State of Illinois plans to apply for a sweeping federal waiver to overhaul its Medicaid program, according to a draft concept paper issued on November 7, 2013. The waiver proposal, called Path to Transformation, covers all of the State’s Medicaid spending and all of the populations that...

10.30.13

Growth in Illinois Pension Contributions to be Less Than Expected in FY2015

The State of Illinois will need to contribute somewhat more to its five retirement systems in FY2015, but the growth will be less than previously projected due mainly to strong investment returns. Pension contributions required by State law will increase by $103.5 million, or 1.5%, to $6.9 billion...

10.25.13

Unpaid Claims To Pile Up in Retiree Health Programs

The health insurance programs for the State of Illinois’ retired public school teachers outside of Chicago and downstate community college employees face mounting backlogs of unpaid claims as costs continue to outpace revenues, according to a recent report. The report, by the legislature...

10.18.13

New Location Buoys Casino Revenues But Illinois Taxes Remain Flat

According to the latest legislative report on gaming in Illinois, total casino revenues have recovered since the opening of the State’s tenth riverboat casino in 2012 after several years of decline. However, State tax revenues from casino gaming remain stagnant despite the improvement. The...

10.11.13

Capital Planning Overview: State and Local Government Summary

As part of its ongoing analysis of State and local government budgets, the Civic Federation also reviews proposed capital budgets along with any planning documents provided in support of infrastructure investments. Although many governments approve new and reappropriated capital spending on an...

10.03.13

State’s Unpaid Bill Backlog Projected to Decline in FY2014

Aided by an unexpected surge in income tax collections in April 2013, the State of Illinois’ backlog of unpaid bills is projected to decline to roughly $5.8 billion at the end of FY2014. As shown in the table below and discussed in a new report by the Civic Federation’s Institute for...

09.30.13

New State Law Aims at Reforming Economic Development Incentives

The State of Illinois does not currently have a comprehensive policy on economic development incentives.  Instead, the State offers a wide variety of financial incentives that reduce specific State or local tax burdens for businesses. This creates an uncertain tax environment for Illinois...