Illinois fiscal mess is a drag on recovery

Illinois is missing out on the economic boom benefiting most states, a fiscal update from the Pew Charitable Trusts shows. Years of overspending and fiscal mismanagement has the state actually contracting in some economic categories.

“Even in the aftermath of two recessions, most states amassed sufficient revenue between fiscal years 2003 and 2017 to cover all their expenses,” Fiscal 50: State Trends and Analysis says. “But total revenue in 10 states fell short, jeopardizing those states’ long-term fiscal flexibility and pushing off to future taxpayers some past costs for operating government and providing services.”

Illinois trails only New Jersey among the 10 states that fell short.

The update also shows that personal income growth has recovered in nearly all states, albeit at different rates. Illinois’ sluggish income growth again places it near the bottom among states.

“Trends in personal income matter to state governments because tax revenue and spending demands may rise or fall along with residents’ incomes,” the study says.

In one category Illinois surpasses nearly all other states: debt and unfunded retirements costs.

“Unfunded pension liabilities were highest in Alaska (23.7 percent of personal income), Illinois (16.8 percent), Mississippi and New Mexico (both 15.3 percent), and Kentucky (14.8 percent),” the update said.

The state also leads in another sad category – loss of population.

“All but two states—Illinois and West Virginia—added residents over the past decade, with those in the West and South growing fastest,’ the study showed. “Still, population growth is estimated to have slowed nationally and in most states over the past 10 years, continuing a long-term trend. In 2018 alone, nine states had fewer residents than a year earlier. Population changes are tied to states’ economic fortunes and government finances, and are therefore useful for understanding both.”

In sum, the Pew study says that by the end of 2018 most states are benefiting from a more promising and fiscal environment.

“Pressure on state finances eased somewhat as the second-longest economic recovery gained momentum and state tax revenue jumped, at least temporarily,” the update said. “Still, not all states have fully recovered from the shocks of the Great Recession more than a decade ago.”

Count Illinois as one of those states.