November 7, 2017

Illinois ranks 49th in fiscal health in new study


Illinois ranks poorly in a new study of fiscal health among the 50 states.

The analysis, conducted by the Pew Charitable Trusts, shows the state is 49th in terms of expenses outpacing revenues during the years 2002 to 2016.

"Illinois’s revenue was 94.2 percent of expenses over that time period," said Matt McKillop, an officer with Pew’s "States’ Fiscal Health" project. "The only state with a smaller percentage during that time period was New Jersey."

Illinois and New Jersey also were the only two states to run annual deficits in each of the last 15 years.

"In general, there are two major factors that influence these data," McKillop said. "One is the economy, which is always going to be influencing revenue trends and spending trends. The other one is policy decisions. So decisions pertaining to tax policy as well as spending decisions are all going to join together and contribute to how states perform over the long haul."

Many states experienced occasional deficits over the past two decades, especially in recession years. However, McKillop says Illinois’ problems are a big warning sign.

"Chronic shortfalls, like what’s been happening in Illinois, are really one indication of a more serious structural deficit in which revenue will continue to fall short of spending absent policy changes," McKillop said. "Such long-running imbalances can really create an unsustainable fiscal situation."

The most recent data available for the analysis was from fiscal year 2016, meaning any impact of the recent Illinois tax hike is not factored in.

The largest accumulated surpluses since fiscal 2002 were in Alaska (132.3 percent), Wyoming (126.4 percent), and North Dakota (120.6 percent).