Without a budget, what Illinois faces
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Tens of thousands of lost jobs. A shutdown on much-need roadwork. The possibility of filing for bankruptcy. That’s just some of the bad news for Illinois as the state limps along without a budget. Here’s some more:
The numbers are staggering — 180,000 unpaid bills as of early June. That works out to about $14.7 billion, and the backlog has tripled since 2015. That backlog would reach about $28 billion by 2021. Put another way, the state fell behind by about $86 million in just 10 days.
Without a budget, the state is set to enter uncharted territory: “junk” bond status.
Illinois already has the worst credit rating of any state. In early June, S&P Global Ratings downgraded the state to one notch above “junk” status. At the time, the rating agency noted a “severe deterioration” of Illinois’ fiscal condition and “unrelenting political brinkmanship.” What could it mean for the state? The junk-rated Chicago Public Schools are now paying the state’s legal maximum of 9 percent interest on a portion of the borrowing it has relied on to keep the doors open.
Concerned over the state’s fiscal condition, the Multi-State Lottery Association announced in June that it was dropping Powerball in Illinois. Ditto for Mega Millions. A little later, the Illinois Lottery said it wouldn’t be able to pay prizes over $25,000 without a budget by the July deadline. State Rep. David Harris, an Arlington Heights Republican, has called the Illinois Lottery mess “the height of political stupidity.”
Said Harris: “The lottery is a golden goose that lays golden eggs to the tune of about $680 (million) to $700 million a year to our revenue, and we’re screwing around with it.”
Perhaps no other group has felt the impact greater than the non-profit community. Organizations that provide state social services are waiting six months or more to get paid. Many of those organizations have significantly scaled back programs or laid off workers. In early June, 69 percent of social service agencies reported receiving no or only partial payment from the state in fiscal year 2017. In the stopgap budget, funding for domestic violence shelters was eliminated completely. Some organizations have filed suit, trying to force the state to honor contracts, including, in early May, the Pay Now Illinois Coalition, but in mid-June, a state appeals court dismissed the suit, saying the argument put forth was without merit.
Universities and colleges say the standoff threatens enrollment with numerous cutbacks and credit downgrades. In early June, Northeastern Illinois University, which has already instituted temporary shutdowns and furloughed employees, announced it would eliminate 180 full-time jobs because of a $10.8 million shortfall in state funding.
State-funded grants that help some 130,000 low-income students pay tuition are also in limbo. A stopgap budget covered some grants until January. Some schools have been able to front the money in hopes that they’ll be reimbursed, but others can’t.
Elementary and high schools have also made reductions, offering fewer special education services and canceling some buses. Chicago Public Schools announced in early May that it’ll have to borrow $389 million to get through the rest of the year. The nation’s second-largest district had banked on $215 million in pension relief from Springfield, which Gov. Bruce Rauner vetoed late last year.