Illinois must stop budgeting in fantasyland
State leaders rely on budget gimmicks and short-term fixes and they assume speculative proposals will become law and operate exactly as planned just to balance the books, if only on paper. Transparent, laws-on-the-books-based modeling is the only path to long-term stability.
Illinois has relied on flawed modeling practices for its budgeting for years. While the state has managed to balance its budget in recent years, much of this accomplishment is built on a combination of federal money coming in and revenue increases from over 49 new tax hikes under the Pritzker administration.
The temporary windfall of federal funds allowed policymakers to continue resorting to gimmicks and one-time fixes to present a misleading picture to the public. Budget projections have also been artificially pumped with hopeful propositions that are simply assumed to be in effect before the laws enjoining them have even been passed.
If lawmakers want to pass a serious budget, then budget proposals and revenue forecasts should reflect current law only, not proposed changes that haven’t been enacted. Lawmakers should also strive for long-term stability rather than just coming up with new gimmicks every time a budget is due.
Politicians regularly use projected changes to laws to plug up budget deficits, but these changes are built largely on speculation that the law will go into effect and actually deliver the revenue promised. This practice makes budgeting largely fictional, non-transparent, and less than credible.
Illinois has long relied on mass fund sweeps and accounting tricks to cover its chronic budget shortfall.
One of the most egregious examples of this came in 2015 when $250 million was swept from the road fund to cover deficits in the general funds budget. This was a small part of a $1.3 billion fund sweep. These sweeps were part of a last-minute fix which wasn’t accounted for in the budget as originally drafted. This caused the budget to be overstated, leading to disruptions in transportation funding and delays in sending tax revenues to local governments.
The resulting voter frustration led to approval of the “lockbox” amendment, which constitutionally protected transportation revenues from being used for other purposes.
The pattern of arbitrary and irresponsible budgeting continued in 2021 when Pritzker pushed for nearly $1 billion in tax hikes, mostly through gimmicks. Proposals included capping net operating loss deductions, freezing the corporate franchise tax phase out and attempting to cut the Invest in Kids tax credit – all short-term fixes with long-term consequences. While some measures were passed, others such as cuts to Invest in Kids met heavy opposition and would be contested for several years.
Fast forward to 2026 when Pritzker proposed a delay in the fund transfer of $171 million from motor fuel sales taxes to the Road Fund, a workaround that undermines the spirit of the lockbox agreement. Pritzker claims this maneuver is a one-time delay to avoid further tax hikes, though there has been no approval for this proposal yet.
Overall, these gimmicks generate nearly $1.9 billion in extra revenue from temporary patches and projected higher than expected revenue, though these benefits are doubtful since newer estimates from COGFA suggest revenue will fall $1.2 billion short of expectations.
The use of the kinds of methods described above result in a picture of state finances that is highly misleading and forms a poor basis for budgeting. A budget that appears balanced on paper can collapse when proposals aren’t passed or fail to deliver the assumed benefits, forcing midyear cuts or borrowing.
Illinois budget models should rely on independent estimates that project revenue based solely on laws currently in place. Proposals for fund shifts or changes in tax rates should be shown separately, not simply assumed in advance to boost the totals.
Past economic booms have managed to shield the state from the impact of these practices, but with federal covid funds running out and a potential $1.2 billion budget shortfall headed our way, Illinois must adopt responsible fiscal planning which draws a clear line between what the law allows today and what politicians would like to assume based on what they hope to do tomorrow.
Illinois can’t afford to budget on fantasy any longer. The stakes: residents’ trust, future stability and basic fiscal honesty, are too high.