Last week in Illinois, Gov. Pat Quinn signed a $24.9 billion general fund budget. The governor basically wrote the budget himself with emergency authority granted by the legislature after a months-long stalemate where no agreement on significant spending cuts or tax increases could be reached.
The final budget includes a perfect example of the type of smoke-and-mirrors threats big government pols use to coerce votes for a tax increase. Remember back to the short-lived deliberations over Quinn's proposed $1 billion income tax increase, when the governor claimed he would be "forced" to cut education spending by $1.3 billion? Shockingly, that was nothing more than a scare tactic, as elementary and higher education spending is down only $341 million. It turns out money is a fungible asset and appropriators have the ability to prioritize spending.
The Quinn budget is also an exercise in cooking the books. The Illinois Policy Institute has a detailed look at the discrepancy between the $1.4 billion the governor claims to cut from the budget, and the $509 million in actual savings. Nearly two-thirds of Gov. Quinn's purported "cuts" come from accounting gimmicks and undefined "cost savings."
This type of shell game is exactly why Illinois' bond rating is in freefall. State government has shown a shocking disregard for the type of structural reforms it needs to finally return to a solid fiscal footing. The legislature was unwilling to pursue any sort of "controversial" reform in an election year, so they punted to the governor, who decided to tout fake budget cuts rather than, you know, govern. In dropping the state's bond rating a second time, Fitch Ratings said the decision "reflects the continuing unwillingness of the state of Illinois to take action to address its significant budgetary problems." Now, a state relying heavily on borrowing to "balance" its budget will see the cost of borrowing skyrocket, as nobody really trusts state government to get its fiscal house in order.
Illinois is also expected to make a $4 billion pension payment this year, but Quinn's budget conveniently ignores that fact. The budget is a pathetic display of a lack of leadership from a governor who has no idea what he's doing. When his $1.5 billion income tax increase failed to pass the laugh test among the voting public, he thought a $1 billion income tax increase would suffice. When that failed, he cobbled together a budget full of false spending cuts and unfulfilled obligations. Illinois' bond rating will soon fall in the junk category and the state will literally be out of options.