PRESS RELEASE from the
ILLINOIS POLICY INSTITUTE

CONTACT: Melanie Krakauer (312) 607-4977

Illinois Forward 2023: Balance the budget permanently, save taxpayers nearly $3.6 billion in first year
Illinois could again see a $6.5 billion bill backlog without key reforms under Gov. J.B. Pritzker

CHICAGO (Jan. 31, 2022) – After receiving $14 billion in one-time federal aid, Illinois could see a balanced budget for the first time in 22 years. But if Gov. J.B. Pritzker sticks to the status quo at Wednesday’s Budget and State of the State address, experts warn Illinois will soon see a return to state deficits. The unpaid bill backlog could rise back to $6.5 billion within five years, where it hovered before federal aid flooded in.

To end Illinois’ perpetual budget crisis, the nonpartisan Illinois Policy Institute released a comprehensive plan to save taxpayers $3.6 billion in the first budget year alone and put the state on a stronger fiscal path, permanently.

“Illinois Forward 2023” offers a way to balance the budget without raising taxes. It utilizes common-sense pension reform, reinvests unnecessary administrative costs into classrooms and rightsizes taxpayer costs for state worker health insurance.

“Illinois’ state government financial health was the worst in the nation before the COVID-19 pandemic began – it still is today. A flood of federal aid and bailouts for state and local governments saved Illinois from collapse, but without long-needed structural financial reforms, the state’s finances will end up in an even worse position when that aid expires this year,” said Adam Schuster, senior director of budget and tax research at the Illinois Policy Institute. “It’s time for Gov. Pritzker and the General Assembly to address Illinois’ key cost drivers and prevent future generations from inheriting unsustainable debt and tax burdens.”

Notably, this plan relies on no federal aid. Illinois Policy Institute experts recommend using remaining federal aid money to refill the state unemployment trust fund to its pre-pandemic balance. It was depleted during the COVID-19 economic downturn and currently stands at a net deficit of $6.3 billion. Otherwise, small businesses face automatic payroll tax hikes while many still struggle to recover.

Illinois Forward 2023 solutions:

• Pension reform ($2.4B in savings in first year, $9.3 billion over five years): Amend the state constitution so earned benefits are still an ironclad contract, but future benefit growth can be adjusted to sustainable and affordable levels – such as by pegging cost of living adjustments to inflation.
• School district efficiency ($2.6 billion in savings over five years): Invest in classrooms, students and teachers by reducing administrative costs. This would allow Illinois to grow state spending more slowly while boosting outcomes.
• Right-size health insurance ($2.7 billion in savings over five years): Adjust the taxpayer burden for state health insurance plans to bring costs more in line with what private sector workers receive.
• Implement Tier 3 ($3 billion savings over five years): Offer a hybrid defined-benefit and defined-contribution pension system as a portable pension alternative for new workers. The law already exists and simply needs an implementation date to take effect.

Background on the state budget:

• Federal assistance allowed Illinois to pay down debt and improve the state credit rating, which is still the nation’s worst. Without the funds, state finances verged on collapse.
• Since taking office, Pritzker has signed 24 tax and fee increases worth $5.24 billion. Total spending under his administration is 3% higher – or about $5 billion more – than before he took office. That’s not including any spending increases this year.
• Based on independent estimates from financial economists, paying down Illinois’ pension debt without reform would require $10 billion in service cuts or a 50% income tax increase for 25 years, which would saddle the average Illinois family with an extra $1,800 per year tax burden.

To read the full “Illinois Forward 2023” plan, visit illin.is/ILFWD2023.

For bookings or interviews, contact media@illinoispolicy.org or (312) 607-4977.