The Problem

State spending in Illinois has skyrocketed over the past decade, increasing 39 percent from 1998 to 2008 (after inflation).

“Appropriated Funds Expenditures” include general, highway, special state, bond financed, debt service, federal trust, revolving funds, and state trust funds.

Illinois’s population growth has been minimal, increasing just under 7 percent between 1998 and 2008. Population growth has been limited, but not so with per capita spending. In 1998, state spending per resident was $3,500. Ten years later, state spending per resident was $4,600 (inflation adjusted). Government spending growth on a per-person basis has been on a sharp–and unaffordable–upward curve.

The Solution

Over-spending isn’t a problem that is going away by itself. In fiscal year 2009, Illinois spent $4.3 billion more out of the general fund than it brought in from revenues. Without a restraint mechanism in place, most politicians will be inclined spend every available dime, regardless of whether or population growth even warrants it. It’s time to put government on a diet.

How can this be done? With an expenditure limit that would cap state spending at last year’s budget multiplied by the previous year’s combined percentage rate of inflation and population growth.

Why This Works

A sensible expenditure limit would ensure that state spending doesn’t grow beyond taxpayers’ ability to pay for it. This spending “brake” still allows government to grow, but it prevents it from speeding dangerously out of control. Instead of reaching ever deeper into the taxpayer’s wallet, government will be encouraged to focus on internal efficiencies and innovations to improve and expand services.

If Illinois had enacted an expenditure limit in 2004 that limited spending growth to population plus inflation, the state could have cumulatively saved $13.7 billion over the past six years.  That’s money that could have been put in a rainy day fund, applied toward the unfunded public employee pension liabilities, or even refunded to taxpayers.