ILLINOIS (WCIA) — Financial experts are revealing the flimsy truth behind the state’s new budget. The new fiscal year starts Sunday, but missing is a long-term, stable plan.
Credit agencies, like Moody’s and Fitch, are calling it more of the status quo. There wasn’t a credit downgrade but the credit agencies are still issuing warnings.
Some like to say, if Illinois continues on this path, the state will remain just one unexpected crisis away from a credit downgrade. For taxpayers, it’s a risky move.
If money problems spiral, it could mean paying more into the government, but getting fewer services. While credit agencies are applauding the state for passing a budget on time, they’re holding back on calling it balanced.
Fitch says there is a $100 million hole in this year’s budget. They add, it’s risky because it depends on too many savings which aren’t guaranteed.
Pensions for example. Lawmakers introduced a buy out system they say will save $400 million this year. But, it comes only if people do it.
Another flimsy promise is the sale of the Thompson Center, in Chicago. Experts estimate the $300 million in savings won’t kick in until next year.
Lastly, a big one; $412 million in state worker pay increases. After a long court battle, it appears the state is on the hook.
Governor Bruce Rauner and lawmakers say this year’s budget was a compromise and no one got what he or she wanted.
Rauner has been criticized for not pushing reforms. He’s vowing, if re-elected, to again push his turnaround agenda.
The biggest task on hand is finding a way to fund pensions. It’s estimated pension debt is a third of state spending; right now, a massive $130 million.
It’s re-election season. To be determined is how honest lawmakers are with their constituents about fixing the state’s big financial issues.
There were undoubtedly some credit positives in this year’s budget. Moody’s applauds the state for investing more in K – 12 and higher education. It also noted an increase in funding for local governments.