February 25, 2013
Prior to the release of the Governor’s annual budget recommendation, the Institute for Illinois’ Fiscal Sustainability at the Civic Federation releases an analysis of the State of Illinois’ fiscal condition. The FY2014 Roadmap includes a review of Governor Quinn’s three-year budget plan, a rough five-year budget projection for FY2014 to FY2018 and recommendations for the Governor and General Assembly to improve the state’s financial condition.
The analysis shows the State on track to accumulate nearly $22 billion in unpaid bills by FY2018 unless action is taken to curb rising pension costs and plan for cost increases in the Medicaid program. This outlook has improved since the Federation’s January 2012 projection, largely due to significant Medicaid program reductions authorized in June 2012.
Without immediate action to curtail rising pension costs, the Federation’s analysis finds that the State will be unable to stabilize its fiscal condition. Pension costs, including annual contributions and debt payments on pension bonds, are projected to consume nearly one third of State-generated revenues by FY2018. The report also warns of the substantial loss of State revenue beginning January 1, 2015, following a partial rollback of the temporary income tax increase enacted in 2011. With the resulting decline in revenues and growing annual pension costs, the State’s operating deficit is projected to increase dramatically to $4.2 billion in FY2018, compared with a modest surplus in FY2013.