Report predicts Illinois’ financial crisis

Illinois’ fiscal policies will lead to serious problems in the future, warns an upcoming report from the University of Illinois system’s Institute of Government and Public Affairs.

“Fiscal Condition Critical: the Budget Crisis in Illinois” is a report that explains Illinois’ budgetary fiscal crisis and outlines the short- and long-term problems, said Richard Dye, co-writer and professor with IGPA at the University of Illinois at Chicago.

“The short-term problem is the budget is not balanced even though the Legislature and government have said it is,” Dye said. “They have balanced it by borrowing more money, ignoring bills and assuming cuts will be made across the board.”

James Kuklinski, political science professor, said he is concerned about the situation.

“At the moment there’s no obvious way out of this situation. It’s just not at all clear how we’re going to come up with the revenue,” Kuklinski said. “I suspect after the elections, the Legislature will take very seriously increasing taxes.”

Dye said the state will be facing severe problems 15 years from now.

“The long-term problem is that even if the state can get out of the hole, the baby boomers are retiring and health costs are going up. Both will eat into the budget,” he said.

Dye said Illinois’ fiscal situation has been precarious for a while.

“The state did not manage the budget well before the recession hit and drastically declined the tax revenues,” he said.

Illinois has gotten into a mess because of a mismanaged state government, said Daniel McMillen, co-writer and IGPA professor at the University.

“Illinois has not been setting aside enough money for its pension system for a long time. It has a chronic deficit and borrows more and more money,” McMillen said.

Samuel Gove, director emeritus at IGPA, said Illinois is in serious trouble.

“I’m retired and my money comes from the pension fund,” Gove said. “Pretty soon that’s going to be in trouble.”

McMillen said part of the problem is the state’s tax policy.

“Illinois has relatively high tax rates compared to the nation, but the tax base, who must pay, is narrow,” he said. “As the economy has moved to services instead of goods, Illinois has not kept up.”

Dye said Illinois’ fiscal crisis means bad news and good news for the University.

“The good news is that six or seven years ago the state stopped increasing funding to higher education. Even though there’s a budget crisis for the state, there will not be a terribly large effect on the universities because much of their revenue is from tuition,” he said. “The bad news is that students will have to make up the difference by paying increased tuition.”