Civic Federation says Pritzker budget plan is ‘workable’

By Doug Finke
State Capitol Bureau

Posted May 16, 2019 at 12:01 AMUpdated May 16, 2019 at 3:02 PM

The Civic Federation said Gov. J.B. Pritzker’s budget plan for next year “represents a workable short-term plan to move Illinois forward” in a report that will be issued Thursday.

The budget watchdog group said, however, it still has “significant concerns” the fiscal year 2020 spending plan relies on aggressive estimates for revenues and also may not adequately provide a long-term solution to the state’s bill backlog and pension funding.

“As proposed, the budget represents a relatively rickety financial bridge, though it has been significantly strengthened in recent days,” said Civic Federation President Laurence Msall in a statement. “The General Assembly is approaching the deadline to pass several components upon which this budget and the governor’s long-term plan rely and revenue projections attached to many of the proposals remain uncertain.”

Consequently, the federation’s Institute for Illinois’ Fiscal Sustainability, which prepared the budget analysis, suggested Pritzker and lawmakers have a backup plan ready that doesn’t short the pensions or further run up the bill backlog.

The federation gave Pritzker credit for using a projected increase in state tax collections next year to pay down pension debt. Pritzker’s original budget plan called for the state to extend the payment schedule to the pension systems by seven years, shorting the systems by hundreds of millions of dollars. The federation said it couldn’t support that idea “because it would have further jeopardized the financial condition of Illinois’ severely underfunded retirement systems.”

The federation said it is opposed to Pritzker’s idea of borrowing $2 billion to put into pensions because it will have a minimal effect on the pension debt while exposing the state to interest rate risk.

Pritzker deserves credit for introducing new revenues, the federation said, while also sounding a note of caution. Pritzker is banking on revenue from recreational marijuana and legalized sports betting to help balance next year’s budget. However, with just two weeks left in the spring session, both of those proposals remain works in progress that could be difficult to pass.

Pritzker has also put a lot of reliance on approval of a graduated income tax as a long-term solution to the state’s financial problems. However, the earliest that could be implemented is 2021, assuming voters approve the idea during the 2020 election.

The federation said the governor and legislature might be better off focusing on passing a budget by the end of May and leaving a capital plan — and the tax hikes to pay for it — until another time.

As it has before, the federation repeated its suggestions for the state to finally resolve its financial problems, including limiting spending growth, expanding the sales tax to some services and taxing the same retirement income that is subject to federal taxation. Pritzker has said he’s opposed to taxing retirement income.

Contact Doug Finke: doug.finke@sj-r.com, 788-1527, twitter.com/dougfinkesjr.

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