October 08, 2014
This analysis finds that the State of Illinois' FY2015 enacted budget represents a return to unsustainable fiscal practices including borrowing for operations and underfunding known costs. This spending plan will increase Illinois’ backlog of unpaid bills to $6.4 billion at the end of FY2015, the first year-end increase since FY2012. Additionally, the budget fails to fund nearly $500 million in known expenses, including payroll, which will require either a supplemental appropriation in FY2015 or a shutdown of programs.
The State of Illinois faced one overriding fiscal issue in FY2015: how to deal with the expected drop in revenues caused by the phase-out of temporary income tax rate increases enacted in 2011. Income tax revenues are projected to decline by $1.9 billion in FY2015 when the higher rates are scheduled to start rolling back mid-year. Rather than keeping the higher rates or cutting spending, the FY2015 budget relies on short-term measures and budgetary gimmicks. These gimmicks will make it even hard to balance the budget in FY2016, the first full fiscal year with the lower income tax rates.
The State’s Fiscal Year 2015 began on July 1, 2014 and ends on June 30, 2015.