IL comptroller warns of 'massive fiscal crisis' by end of the month
On May 31, the Illinois legislature adjourned for their summer break without passing a state budget. There is nothing unusual about this. The state House and Senate are solidly in Democratic control while the Republicans control the state house with Governor, Bruce Rauner and for three long years, the politicians in Springfieild have been unable to agree on a budget. This has led to a fiscal mess that the state comptroller, Susana Mendoza is now referring to as a "massive crisis."
Comptroller Susana Mendoza must prioritize what gets paid as Illinois nears its third year without a state budget.
A mix of state law, court orders and pressure from credit rating agencies requires some items be paid first. Those include debt and pension payments, state worker paychecks and some school funding.
Mendoza says a recent court order regarding money owed for Medicaid bills means mandated payments will eat up 100 percent of Illinois' monthly revenue.
There would be no money left for so-called "discretionary" spending - a category that in Illinois includes school buses, domestic violence shelters and some ambulance services.
Illinois is in a fiscal death spiral. Their bond rating is one step above junk status. And the list of consequences for the state's failure to pass a budget is a tale of woe that no state or territory - not even Puerto Rico's current bankruptcy - can match.
- If there is no state budget by June 30, 2017, the Illinois Department of Transportation announced that they would be forced to halt all state projects that could cost 30,000 jobs.
- The Illinois Lottery faces threats of removal from the Powerball and Mega Millions if there is no budget by June 30, 2017.
- Illinois owes school districts more than $1.1 billion in categorical payments for special education, transportation, bilingual and early childhood services.
- Illinois’ backlog of unpaid bills stood at record $14.5 billion as of May 31, according to Comptroller Susana Mendoza.
- The state’s Medicaid managed care organizations are owed $2 billion.
- Centerstone, a non-profit behavioral health organization that helps 16,000 clients in southern Illinois and the metro-east region, has shuttered offices and cut services amid the budget impasse, affecting 700 clients and 39 staff members throughout the state.
- The Wells Center, a drug treatment facility in downstate Jacksonville that has been operating for 50 years, was forced to shut down operations because of the budget impasse.
- Illinois’ unpaid bill backlog could hit $25 billion by FY 2019 if the state continues without a budget.
- Students and parents are looking to out-of-state colleges due to the unstable climate within Illinois’ higher education system.
- More than 1,500 employees have been laid off at public universities and community colleges throughout the state.
There is much, much more. Editor Lifson wrote today of two scandals at Illinois schools that reveal a culture of mismanagement. You pile the huge shortfall in funds that Illinois colleges are facing after June 30 if no budget is passed and you have the possibility that some schools will have to furlough students and lay off faculty.
How much longer can this intolerable situation continue? The two sides are blaming each other for the budget impasse but it's hard to see how both Democrats and Republicans aren't both to blame. Rauner's austerity budget - which includes property tax relief - is a political toxic waste dump that even many Republicans can't stomach. Meanwhile, the Democrats have proposed a fantasy budget. The numbers being used by Dems are divorced from reality and would result in an even more destructive fiscal situation.
I think both sides are secretly hoping Washington will be forced to intervene and bail them out, although Dems and Republicans claim they desire no such thing. But if the fiscal crisis tips to catastrophe and the poor, the elderly, and other marginal residents begin to suffer the consequences of gridlock, the calls for help from Washington may be hard to ignore.