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Illinois Tue Mar 09 2010
The really short answer is because Dan Hynes warned us this was going to happen back in 2006.
Paying increased costs for employee pensions, health care for the poor and debt service will eat up virtually all new money the state can expect to bring in over the next three years, Comptroller Dan Hynes said Monday.
The state faces "a serious crisis" by 2010 unless lawmakers take a long-term view of state finances, Hynes told a business group in Chicago.
But this is a problem that has been brewing for years and years. The current economic situation may have hastened it, but this day has been coming for a long time and a large number of different issues have contributed to it.
The Pension Shortfall
For example, the state pension shortfall that has gotten a lot of press attention lately is nothing new. Back in 1995 the state started on a 50-year plan to get the pension system back in line; that lasted all the way until 2003 when, in his first budget, Rod Blagojevich floated $10 billion in 30-year bonds to cover two years worth of pension payments. The state characterized "profits" that would accrue over 30 years to justify not making the pension payment for two years (PDF). The state looked at doing the same thing in 2007.
Stupid Budget Tricks
As I have been searching my blog for budget items I have been finding things that go back five years and longer. During the Blagojevich era lots of ideas were floated to make more money available. Lots of them basically were of the "let's treat tomorrow's possible savings as today's revenue, and do fund sweeps" sort. That is, taking special purpose funds and treating them as general revenue funds.
Then there is the all-time classic of just pushing last year's bills into the next fiscal year. As Pew points out, in 1998 we did this with $752 million worth of Medicaid bills, in 2003 it was $1.85 billion and has only grown since then. As the Civic Federation showed recently (PDF), the state has run a general fund deficit every year since FY2002 in large part because the state has carried over the deficit from the prior year.
Coming soon, part two: State Debt, the $25.4bn gorilla.