Illinois Shows Multi-Billion-Dollar Reduction in Projected Deficit

Illinois Shows Multi-Billion-Dollar Reduction in Projected Deficit

The Governor’s Office of Management and Budget released the annual Economic and Fiscal Policy Report showing Illinois has made significant improvement in its structural deficit.

According to a GOMB news release, the progress has been fueled by implementing balanced budgets, promoting economic development to create jobs and boost economic activity, and closing corporate tax loopholes.

GOMB is now projecting significantly smaller deficits than estimated previously in the general funds budget for fiscal years 2023 through 2027.

The forecasted fiscal year 2023 shortfall was reduced from $2.9 billion, as estimated in 2019, to $406 million, and the 2024 shortfall was reduced from $3.2 billion, as estimated in 2019, to a deficit of $820 million.

“With our partners in the General Assembly we’ve made tremendous progress in putting Illinois on the right fiscal path, supporting small businesses, and creating good jobs in every part of our state,” Gov. JB Pritzker said.

The future years’ budget outlook also benefits from strong pension fund investment returns in fiscal year 2021, substantial early debt retirement in 2021 and interest cost savings from paying down the State’s unpaid bill backlog.

According to the news release, the state’s unpaid bills have been significantly tamed, with the vast majority of bills now paid within 30 days. The outstanding invoices, most of which are less than 30 days old, are estimated to fall below $2.75 billion by the end of fiscal year 2022, down from the $9.2 billion of outstanding bills and cashflow borrowings prior to taking office.  This would be a nearly $6.5 billion — or 70% reduction — while replenishing the Budget Stabilization Fund that was drained during the previous administration.

Illinois’ significant improvement to its fiscal outlook was heralded last summer by the state’s credit rating agencies, with an upgrade to its general obligation bond credit rating granted by Moody’s Investor Services and S&P Global Ratings in June and July 2021.

GOMB is required to annually submit an Economic and Fiscal Policy Report to the General Assembly outlining the long-term economic and fiscal policy objectives of the state, along with the economic and fiscal policy intentions for the upcoming fiscal year and for the subsequent four fiscal years.

The reports are available to the public online and can be found here: https://www2.illinois.gov/sites/budget/Pages/PolicyReports.aspx.