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The Illinois General
Assembly and the Governor’s office failed to reach
agreement and complete their work on the fiscal year
2007 budget by April 7, the previously announced
adjournment date. This is not unusual. The General
Assembly has frequently failed to meet adjournment
deadlines. When the legislature’s calendar is extended,
attention is focused on the state’s spending plans. This
is an important time for all taxpayers.
As our
governmental leaders work towards reaching a budget
resolution in the coming days, I think Chamber members
and employers might appreciate knowing some basic fiscal
facts. use this information when you encounter and
discuss public policy matters with your legislators.
I have chosen this President’s Message to the
Members to share some insight on the state’s budget and
fiscal policies. The following letter
from The Illinois Coalition for Jobs, Growth and
Prosperity was recently delivered to members of the
Illinois General Assembly, and I hope you will find the
content informative and useful as you engage in
conversations with others about the state’s fiscal
policies.
The Illinois Chamber is a founding
member of the Jobs Coalition. The Jobs Coalition is a
useful vehicle for promoting cooperation and bringing
greater unity to the voice of the state’s employers. The
Jobs Coalition has proven a useful forum for pooling
knowledge and resources from independent organizations
to promote common interests.
April 5, 2006
Dear Member of the Illinois General Assembly:
Despite respectable revenue growth each of the
past four years, Illinois has more than doubled its
general obligation debt, deferred payments of more than
$2.3 billion to its pension systems, extended payment
cycles from 30 days to more than 90 days to most service
providers, depleted balances in fee-supported funds by
more than $2 billion, and diverted more than $2 billion
in highway user fees.
Clearly, Illinois is
drowning in debt. Consider the following:
- Illinois’ bonded indebtedness now totals $20.3
billion, compared to $7.6 billion just four years ago.
- Depending on investment assumptions, the net
present value of unfunded pension liabilities is
estimated to be $38 billion and growing. The State’s
pension funds have the largest unfunded accrued
liability in the nation.
- The current $2.3 billion pension holiday is
opening huge future funding gaps that will cost
between $18-25 billion over the next 40 years.
- More than 80% of nearly 10,000 Illinois voters in
a recent Coalition poll indicated that they were
against the concept of skipping public pension
payments to balance the budget.
The structural
deficit in the State budget as we approach FY 2007 is at
least $2 billion, and likely more. Here’s that
breakdown:
- The structural deficit in Medicaid will need to be
confronted when the new fiscal year begins on July 1.
At the end of June, an estimated $2 billion in
outstanding Medicaid bills will be awaiting payment.
Add to this the additional hundreds of millions that
will be required to fund the coverage for hundreds of
thousands of people the Governor added to Medicaid
rolls last fall, and the budget deficit that Illinois
faces in Medicaid alone will only grow more daunting
in the next fiscal year.
- The recent annual pension fund diversions are now
built into the State budget base and must be replaced
either by new revenue or spending reductions.
- The annual diversion of hundreds of millions from
special funds is also now in the budget base.
Depending on how pending court cases challenging that
practice turn out, the State general revenue fund may
have to return more than $1 billion in purloined
money.
Base revenue projections for the
current fiscal year from the Governor’s Office of
Management and Budget have been increased by $424
million. The Illinois Commission on Government
Forecasting and Accountability (CGFA) has increased its
projections by $440 million in 2006. We urge that all
“found” money be put to non-recurring expenditures and
not be used to increase next year’s budget base.
For the coming FY2007 budget, we strongly urge
that a large portion of the anticipated revenue growth
(estimated at more than $750 million) be used to pay
down the massive debt that Illinois now faces.
As you consider the 2007 budget proposals
offered by the Governor, keep these facts and
suggestions in mind. As representatives of the Illinois
business community, our members would not be in business
for very long if they practiced the “voodoo economics”
being put forth by this administration. We implore you
to resist calls for new spending and look for a
blueprint that will begin to right our budgetary ship of
state.
Sincerely,
Jeff Mays
Illinois
Business Roundtable |
Gregory Baise
Illinois
Manufacturers' Association |
Douglas Whitley
Illinois
State Chamber of Commerce |
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