IIFS Blog

03.26.15

Civic Federation Proposes Local Government Protection Authority at Illinois House Committee Hearing

Under federal bankruptcy law, State governments decide whether and how local governments have access to Chapter 9 bankruptcy. There are 12 states that allow their local governments unfettered access to municipal bankruptcy, 12 states that allow municipal bankruptcy under certain conditions, two...

03.23.15

No Budgetary Relief from Latest Illinois Revenue Estimates

The most recent legislative analysis of the State of Illinois’ annual revenues provides little hope for additional gains from economic growth to help solve the State’s ongoing budget crisis. This is in contrast to the last several budget years when the State has experienced revenue...

03.11.15

Governor Proposes Significant Reduction in Funding to Local Governments

Under Governor Bruce Rauner’s proposed FY2016 budget, one of the largest sources of state funding for local governments in Illinois would be reduced by half. The reduction is part of more than $4 billion in spending cuts and $2.2 billion in estimated pension savings recommended by the...

03.06.15

Illinois Governor Proposes ‘Hard Freeze’ of Pension Benefits

Governor Bruce Rauner’s recommended budget for fiscal year 2016 includes a new plan for reducing the State of Illinois’ massive pension costs. As discussed here, the plan could cut the State’s unfunded pension liability by approximately $25 billion and save $2.2 billion on pension...

02.27.15

Governor Proposes Shifting Capital Funding For Delayed Maintenance

Alongside his first operating budget proposed for the State of Illinois, Governor Bruce Rauner also recommended a capital budget for FY2016 that proposes shifting previously vetoed spending authority to pay for delayed maintenance at State owned facilities across the state. As previously discussed...

02.20.15

Governor Proposes Deep Cuts and New Pension Reforms to Balance FY2016 Budget

In his first budget proposal for the State of Illinois, Governor Bruce Rauner recommended more than $4 billion in spending cuts and $2.2 billion in estimated pension savings to close a projected budget gap of over $6 billion in fiscal year 2016. The proposed $31.5 billion General Funds budget...

02.13.15

Illinois’ Most Expensive Tax Exemptions

The State of Illinois reduces its operating resources by more than 25% annually to provide individuals and businesses tax benefits through exemptions also known as tax expenditures. In FY2013, the most recent year that data have been reported on tax expenditures, the exemptions in Illinois totaled...

01.29.15

Comparing Investment Return Assumptions of Illinois Pension Funds to National Trends

At the end of December, the Illinois Auditor General released the State Actuary’s annual report on the actuarial assumptions and valuations of the State’s five pension funds. In its report, according to State law, the State Actuary must evaluate whether the pension funds’...

01.23.15

Illinois Reduces Revenue Estimates for Corporate Income Taxes

The State of Illinois projected a major loss of income tax revenues in FY2015 due to the reduced rates for individuals and corporations that took effect on January 1, 2015. However, corporate income taxes have taken a steeper decline than originally projected and began to fall even before the rate...

01.15.15

Illinois Medicaid Plan Awaits Action by New Administration

The fate of a proposal to use more than $5 billion in new federal funds to overhaul the State of Illinois’ Medicaid program remains unclear as a new gubernatorial administration takes office in Springfield. As previously discussed on this blog, the five-year proposal focuses on developing...

01.09.15

Legislative Study Proposes New Rules to Strengthen State Rainy Day Fund

According to a recent study, the State of Illinois does not set aside enough revenue to account for fluctuations in its volatile tax sources and needs to improve its rules for making rainy day fund deposits in order to prepare for future financial challenges. The extensive report includes an in-...

01.02.15

Governor's Budget Projection Shows Consequences of Income Tax Rate Decline

A drop in Illinois’ income tax rates—and uncertainty about the implementation of pension changes—could cause the State’s backlog of unpaid bills to grow to $9.9 billion by the end of the 2016 budget year, according to a new forecast by Governor Pat Quinn’s office....

12.23.14

2014 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 2014 and represent the most closely followed Illinois fiscal issues of the year: State pension reform and the State budget. States Face Legal Challenges Over Reduced...

12.17.14

New Report Sheds Light on Illinois Pension Problems

For anyone who wants to understand the pension crisis facing the State of Illinois, a recent report for the State’s largest pension fund would be a good place to start. The preliminary actuarial valuation report for the Teachers’ Retirement System (TRS) for the fiscal year ended on June...

12.12.14

Governor-Elect Rauner Critiques Interfund Borrowing

On a preliminary trip to Springfield after winning the November election, Governor-elect Bruce Rauner held a press conference to draw attention to some of the gimmicks included in the current State budget, including interfund borrowing. Mr. Rauner called the plan to use $650 million borrowed from...

12.04.14

Preview of Illinois’ FY2016 Budget Process

The Illinois House adjourned on Wednesday, December 3, 2014 with no further session days scheduled before the 99th General Assembly begins in January 2015. The Illinois Senate is expected to adjourn on December 4, 2014 and has one addition session day scheduled for January 13, 2015. This will mark...

11.25.14

Illinois Attorney General Seeks Expedited Appeal of Pension Reform Case

Shortly after a Sangamon County Circuit Court Judge ruled that the pension reform law passed in Illinois almost a year ago violated the State constitution, Attorney General Lisa Madigan announced she will be seeking an immediate appeal of the decision to the State Supreme Court.  Judge John W...

11.20.14

Illinois Takes Disciplinary Action Against Three Medicaid Managed Care Organizations

As the State of Illinois nears its deadline for moving Medicaid recipients into managed care, three managed care organizations have been disciplined for providing poor quality medical care or failing to comply with operational requirements. The Illinois Department of Healthcare and Family Services...

11.14.14

Positive Economic Report Overshadowed by State Tax Policy

Nearly all indicators point to positive economic growth in the State of Illinois for the fifth consecutive year in 2015 but due to a change in income tax rates, State government finances remain in crisis. In a report issued earlier this month on the results for the first quarter of fiscal year 2015...

11.06.14

Proposed State Pension Contributions Increase by $682 Million in FY2016

The State of Illinois will need to increase contributions to its pension funds by $682.0 million in the next budget year, according to preliminary amounts released by the State’s five retirement systems. Total pension contributions required by State law are estimated at $7.5 billion in...

10.31.14

State's Operating Budget Continues to Supplement Capital Projects Fund

When the Illinois Jobs Now! capital spending program was approved in 2010 the State also approved a series of dedicated revenue sources intended to fund new borrowing costs outside the State operating budget. As previously sold capital bonds were retired, it was anticipated that the cost for new...

10.23.14

Budgetary Gimmicks Allow Spending Increases in State’s FY2015 Budget

As previously discussed here, the enacted FY2015 budget for the State of Illinois includes several budgetary gimmicks intended to make up for the loss of revenues associated with the expiration of the temporary income tax increases halfway through the fiscal year.  Two of these measures...

10.15.14

State of Illinois Education Funding: Analyzing Trends

Whether the State of Illinois has spent more or less on education in the last five years has recently been the subject of intense debate. This blog post examines various factors that affect the calculation of education spending trends and expands on the Civic Federation’s recent report on the...

10.09.14

An Overview of State Intervention Laws in Illinois

Municipal bankruptcies are very rare but a spate of filings, including the largest municipal bankruptcy in U.S. history by the City of Detroit, and ongoing municipal budgetary stress around the country has led to discussions of what, if anything, states should do to assist distressed cities. ...

10.02.14

Illinois Medicaid Enrollment under Affordable Care Act Nears 500,000

In the past few months, it has become evident that Illinois vastly underestimated the number of newly eligible recipients who would sign up for Medicaid under the Affordable Care Act. However, the fiscal implications of the unexpectedly strong enrollment remain unclear. Governor Pat Quinn said on...

09.26.14

Illinois Clears Backlog of Income Tax Refunds and Reaps Surpluses

As recently as 2011, the State of Illinois projected its backlog of unpaid income tax refunds could increase to more than $1.0 billion but by the end of FY2014 nearly all refunds were paid. In FY2015, for the second year in a row, the State transferred revenues originally diverted to pay for...

09.18.14

Illinois to Fund Kidney Transplants for Undocumented Residents

A new law that restores certain Medicaid benefits previously cut due to budget pressures also adds a new service: kidney transplants for undocumented Illinois residents. Public Act 98-0651, signed by Governor Pat Quinn on June 16, 2014, authorizes State funding of kidney transplants for low-income...

09.11.14

Social Impact Funding through Pay for Success Contracts in Illinois

Despite its name, a social impact bond (SIB) is not a debt instrument and does not require a government to issue debt. Rather, an SIB is a social impact financing arrangement whereby funds are raised from private sector investors to provide social service agencies the funding necessary to deliver...

09.04.14

Illinois Bond Disclosures Show Risk of Pension Borrowing

Information included in recent bond disclosures by the State of Illinois indicate that the pension obligation bonds (POBs) sold in 2003 primarily to boost the retirement systems’ assets have earned the minimum investment returns needed to break even in only seven of the last ten years....

08.27.14

Illinois Should Not Budget for Payment Delays

Businesses do not always pay their bills immediately, and neither do governments. Delays of a month or two are standard practice, although prompt payment is preferable to take advantage of discounts, avoid penalties and maintain access to the largest possible pool of vendors. Since FY2009, long...