John Klingner at Wirepoints writes what I was thinking — state budgets don’t matter. Here’s how Wirepoints summed up his article in their email newsletter:
No matter what budget politicians might pass this time, it’s going to be a sham anyway. Passing yet another budget with more spending, more deficits and no reforms is not an accomplishment.
Here’s Klingner’s opening:
No matter what budget politicians might pass this time, it’s going to be a sham.
Some lawmakers will inevitably call it “balanced.” Others will call it a fitting end to a successful legislative session. And yet others will say that this is how a budget is done – in contrast to the antagonistic, no-budget years of Gov. Rauner.
Illinoisans shouldn’t be fooled by that rhetoric. Passing yet another budget with more spending, more deficits and no reforms is not an accomplishment.
Illinois finances are still a mess. The state is still one notch away from a junk rating. And Illinois’ worst-in-the nation retirement crisis still imposes $75,000 in debt on every household outside of Chicago and $145,000 on every household in Chicago.
The reality is the budget won’t be close to being balanced. No matter what accounting tricks lawmakers use – and no matter how much in surprise revenue they include – the state will still be stuck with at least $10 billion in structural deficits. That’s a quarter of the current budget.
That $10 billion represents the additional amount of money Illinois should be paying for the true costs of pensions and retiree health insurance, plus the cost of annual overspending and unpaid bills.
The budget they pass will likely include about $8 billion for pensions, which is based on the state’s broken funding ramp and unrealistic investment assumptions.
That’s far short of the $13 billion-plus the state really needs to pay for pensions in the absence of reforms. Wirepoints calculated Illinois’ true yearly pension costs based on equal annual payments, 100 percent funding by 2045 and more realistic investment assumptions (See Exhibit 1). Paying the true cost of pensions would add $5 billion to the budget deficit.
Read more: Wirepoints