state of Illinois Finances

Over the almost four years of Governor Blagojevichs administration, Illinois financial conditions have gotten worse and worse. In the first year of his administration, the state budget deficit declined but since then it has increased each year and now it has reached over 3 billion dollars. The first reason for this has been the continued growth in state government spending on existing programs and addition of new state programs, the cost of these programs has out striped the growth in state government revenues. Another causes is that in order to keep his pledge not to raise to taxes but in attempt to increase state revenues the Governor put into a place an increase in the states business fees that cost business in Illinois 300 million dollars a year and along with that he eliminated 160 million dollars with of sales and income tax exemptions and raised the state minimum wage to well above that in our neighboring states. The end results of this is that Illinois is less competitive than other state when it comes to attracting new business and jobs and this in turn has lead the state of Illinois to add fewer new jobs each year than other states, the rate of job growth in Illinois is the 8th worse in the nation. This in turn reduces the amount of revenue that the State Government could be taking in from the state income tax, since if the employment in the State had been growing at the nation average there would be thousands of more workers paying state income tax each year and along with that sales tax and other tax revenues would rise to.
The long run financial status of the State is even worse, because the state hasn’t been full funding its pension or insurance liabilities and with the debt accumulated by the increased borrowing the Governor has down in order to fun some of his pet programs, the state has incurred 106 billion dollars in debt. The end result of this is that Illinois has the worse deficit of any state in the country and this is beginning to adversely affect the ability of the state to fun need capital improvement project and since the state takes a long period of time to pay it Medicare expenses and then under pay health care providers, the poorest citizens in the Illinois have a hard time finding doctors and receiving medical treatment. This leads them to delay getting medical treatment until their health become very bad, which raised the cost of treating them.

Illinois need to act now in order to fix up our financial house and a tax increase is not the answer, since it would make the state of Illinois even less attractive to business and hurt job growth. What we need to do is bring government spending back into line, we need to cut back on needless program and wasteful pork filled projects that the state CAN NOT AFFORD and slow the spending growth of existing programs. The state need to begin fully funding its pension system and move new employees from the existing system, a defined benefit one, to a defined contribution one, like 401Ks, and we need to bring our Medicare cost in line by making it managed care system, Illinois is currently the only state that doesn’t used managed care Medicare system. We also need to roll back the increase in business fees and use the increase in the national minimum wage as a way to bring our state minimum wage in line with minimum wage in neighboring states so that we will be more competitive when it comes to attracting new business and jobs. This in turn will help raise the amount of revenue that the government receives from the state income tax and then when the state budget is back in line and we are running a surplus, the state need to use those funds to invest in capital projects. These capital projects will improve the states infrastructure and makes us even more attractive to business looking open up or relocate. This in the long run is how we can both fix Illinois budget problems and improve the states economy.