![]() Census Bureau’s annual Survey of State and Local Government Finances, 3 which combines state and local government finances together and categorizes expenditures and revenues consistently across states. To address these challenges in comparing states, I use data from the U.S. Third, states vary in population and income per capita. For example, some states fund K–12 schools primarily through state revenues, while others fund them primarily through local revenues. Second, each state divides responsibilities for its activities differently between state and local governments. First, each state’s budget makes different distinctions between activities funded through its general fund and activities funded through special funds. There are a number of challenges in making a valid comparison of the fiscal situation in Illinois with that in other states. In particular, the accumulation of pension liabilities has become a major source of Illinois’s fiscal problems. state, starting in the mid-1990s, Illinois’s spending consistently outpaced its revenues (which have stayed low). However, unlike the spending of the typical U.S. I show that Illinois used to be a relatively low-expenditure, low-revenue state. ![]() Illinois’s overspending has outpaced the national average since the mid-1990s, primarily through pension spending.How did Illinois get to this point? To address this question, I compare Illinois’s expenditure and revenue performance since the late 1980s with that of other U.S. The crisis has also led credit rating agencies to give Illinois the lowest ratings of any state-which has pushed up borrowing costs. Lawmakers cannot agree on how to solve Illinois’s financial problems, which are substantial: They include a $5.5 billion operating deficit, $7.7 billion in unpaid bills, and an estimated $111 billion in unfunded pension liabilities. It went through the entire previous fiscal year (FY) 1 without a budget and began the current fiscal year (in July) with a spending plan through only the end of the calendar year. The state of Illinois is in the midst of a fiscal crisis. A major contributor to this budgetary imbalance was the accumulation of pension liabilities. state, Illinois began consistently spending more than it brought in. This changed in the mid-1990s, when, unlike the typical U.S. The article shows that compared with the national average, Illinois used to be a relatively low-expenditure, low-revenue state. The author looks back at Illinois’s expenditure and revenue performance since the late 1980s to understand the sources of its current fiscal crisis.
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