Next week, Illinois, the fifth most populous state in the Union, will enter its third month without a budget.
A large part of the government remains open due to court orders and redirection of federal funds, but the budget impasse shows no sign of ending any time soon. At stake is the fiscal future of the state with the nation’s worst credit rating.
Illinois’ economy is almost four times the size of Greece, whose every parliamentary development makes international news. The budget crisis in Illinois, however, barely makes news even within the state. By most economic or fiscal measures, Illinois risks becoming a failed state.
Since 2008, the state was 35th in economic growth in the U.S. The economy in its neighbor, Indiana, grew more than twice as fast. In just 6 years, Illinois has had 13 downgrades of its credit rating. Just over 40 percent of its future pension obligations are funded, by far the worst in the nation. A modest reform of the pension system, passed last year, was ruled unconstitutional by the state’s elected Supreme Court.
If it were a nation, the IMF and World Bank would, no doubt, be involved somehow.
The deadlock is almost an existential disagreement between Republican Gov. Bruce Rauner and Democrat leadership in the state Legislature. Democrats enjoy a near super-majority in the Legislature and have controlled the chambers for most of the past three decades. Rauner, a former venture-capitalist, is the first Republican governor is 12 years.
It is worth noting that the last Republican governor in the state was released from jail just two years ago.
The Democrats are demanding tax increases to bridge the state’s structural budget deficits. Rauner has countered and said the Legislature should first pass his plan for economic and government reforms before he will negotiate the final budget.
Rauner, who is new to political office and apparently did not study at the Mitch McConnell school of negotiating, is sticking to his position.
The Governor rightly sees that negotiations over any particular year’s budget are the least of the state’s problems. Economic growth is the only real solution to the state’s fiscal mess and will not happen without serious reform.
The state is so far behind its own end zone that even punting is no longer an option. Duct-taping together a spending plan with an assortment of “revenue increases” to get through another budget year has been the playbook in Illinois for decades. Rauner deserves more credit for pushing to end this dishonest fiscal dance.
It is unclear how this budget impasse will end. The state legislators are staying on the sidelines, watching like spectators the battle of wills between Rauner and Democrat leadership. It is a body not known for birthing profiles in courage.
Still, it is an interesting backdrop as Congress prepares to file back into Washington to tackle its own fiscal agenda. Republicans will, no doubt, defer to Democrats and run their favorite punt play to put off any real action on economic or government reform.
After all, the United States isn’t Illinois. Yet.
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