Comptroller's Report: Revenues Are Up, but Illinois' Financial Challenge Remains as Challenging as Ever

Controller Judy Baar Topinka notes in her April edition of the Comptroller's quarterly, that actions taken in the first three quarters of fiscal year 2011 have allowed the state of Illinois to gain revenue and avoid financial catastrophe in the short term. But a massive bill backlog and substantial long-term challenges remain.

She notes, at the end of March, the office of the Comptroller had $4.515 billion in unpaid bills with some vouchers dating back to October 2010. The Comptroller's office is at two prioritize critical payments such as debt service and other funding vital to the operation of state programs such as general state aid to school districts.

The report goes on to note that further adding to the backlog is the ongoing need to prioritize Medicaid disbursements in order to receive increased federal stimulus match funding. The federal share of Medicaid payments dropped from 59% to 57% in April. And it will fall to 50% after June 30. Therefore the state is expediting payments on medical bills in order to gain as much of the federal match as possible while time allows. This means others who have been waiting to have their bills paid continue to wait.

The backlog in bills would be even more substantial if not for the $3.7 billion in pension funding bonds issued in March, which was used to pay the majority of the states obligations to the retirement system in fiscal year 2011.

As the report notes, the combination of tobacco bond proceeds, the tax amnesty program and the increase in tax rates led to general funds revenue increase of $1.536 billion, a 7.3% increase. Individual income tax receipts grew by $1.057 billion, through nine months. Corporate income tax revenue increase by $240 million, a 27.6% increase. And the states tax amnesty program contributed $36 million in individual income tax receipts and $215 million in corporate income tax revenue.

SALES TAX: as the report notes, an improving economy increased sales tax revenues by $414 million although $164 million of that was due to the tax amnesty.

GENERAL FUNDS SPENDING: Gen. fund spending increased by $2.45 billion, or 11.3% in the first three quarters of fiscal year 2011. Through nine months of fiscal year 2011 base expenditures have increased by $2.45 billion.

Of this amount, healthcare and family services had the largest increase in vouchers presented for payment among the major agencies, with $537 million. Vouchers presented by the state Board of Education were down $250 million to the first three quarters of the fiscal year. The teachers retirement system of higher education are down $660 million, and $67 million respectively year to date as a larger share of this year's pension payments were funded directly by bond proceeds.

UPCOMING CHALLENGES: the state still has to pay back $1.3 billion from the July 2010 short-term borrowing over the next three months. While that amount is lower than what was outstanding at this time last year, the state shifted over $2 billion in Medicaid spending to other state funds in the fourth quarter of fiscal year 2010 which cannot be repeated this time around.

So while the states tax revenues have grown, the state's bill backlog is not likely to decrease significantly from the current levels, or the levels seen at the end of fiscal year 2010 if the current trends continue.

Thus while the state is collecting some additional dollars, the fiscal challenge of operating the state remains as daunting as ever.

Comptroller Topinka (R) Reacts to Governor Quinn's FY 2012 Budget

SPRINGFIELD – Illinois Comptroller Judy Baar Topinka released the following statement Wednesday in response to Governor Pat Quinn’s proposed budget, which includes $8.75 billion in new borrowing:


“Governor Quinn inherited a financial disaster from his impeached predecessor and I applaud him for working to restore our state’s fiscal integrity. But ultimately his budget proposal promises a new high in state spending and $8.75 billion in new borrowing. We need to end the disastrous pattern of ‘tax, borrow and spend’ that has put us into this mess. My solution is simple: cut spending, pay off our bills and get our house in order. Once that is done, responsible borrowing with a practical payback timeframe can be considered.


“Illinois families and employers recently endured a massive tax increase to allow the state to make ends meet. They are paying more to their state government than at any time in Illinois history, and they should expect no less than a balanced budget. Today’s proposal by the Governor still falls short of that goal, and in fact relies on borrowed money to cover-up an operating budget that is $1.7 billion higher than last year.


“The Governor’s office has indicated a willingness to work with lawmakers and Constitutional officers from both parties to find common ground, and I thank him for that offer. That dialogue provides an opportunity to move away from further discussion of taxing and borrowing, and focus on spending. We must work together to use this fiscal crisis to reassess every dollar spent, and find ways to become more efficient and do more with less. To that end, I encourage all state leaders to craft their own list of savings, or ways to stretch our tax dollars. From long-overdue changes in Medicaid to consolidation of the state’s fiscal offices, there are things we can do – and time is of the essence.”

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