Revised budget estimates from a state agency reveal Illinois could run a revenue surplus of more than $1.5 billion in the next fiscal year, and Governor JB Pritzker is proposing to use those funds to bolster state savings and repay various debts.
According to a news release from the Governor’s Office of Management and Budget, projected additional revenue has led Illinois officials to forecast a net surplus of $1.7 billion in fiscal year 2023 for the budget. general funds.
As a result, Pritzker is seeking to make deposits of $1.3 billion into the state’s “rainy day fund,” which would more than double its current size to $2.3 billion.
Currently, the fund has $1.045 billion, the highest since its inception, but Pritzker’s office says it is one of the smallest rainy day funds in the United States.
Pritzker would also seek to use the extra revenue to repay bonds issued in 2010 to help the state fight the Great Recession. About a third of the $1.5 billion borrowed remains unpaid.
“Illinois’ bills are being paid on time, we have over $1 billion in our rainy day fund, our credit ratings are up, and we are honoring our commitments to long-term financial liabilities by contributing more to Illinois’ retirement systems,” Pritzker said in a statement. “We have closed a seemingly insurmountable structural deficit that I inherited, and together we are ensuring Illinois’ long-term financial stability and providing economic opportunity for its citizens.”
Illinois Comptroller Susana Mendoza says she “wholeheartedly” approves of Pritzker’s plan, but also called on the General Assembly to fund the annual obligations of the Rainy Day Fund and the Pension Stabilization Fund.
“Any urge to spend one-time income on new programs should be resisted,” she said. “Now is not the time to pass. It is time to shore up our reserves and continue to demonstrate strong financial discipline.
According to the GOMB report, a fiscal surplus of $357 million is currently projected for fiscal year 2024, with a significant reduction in the projected deficit for fiscal year 2025.
The initial projections, released in October 2019, had a projected deficit of $3.2 billion, but the new projections have that deficit of $384 million, according to the GOMB report.
In recent years, Illinois has received several credit upgrades from S&P Global Ratings and Fitch, with increased savings and payments into the state retirement system cited by boards. as they explained their justification.
Better credit scores can allow the state to borrow money at lower interest rates, which could save millions of dollars, officials say.
Prior to the Pritzker administration, Illinois received a series of credit rating downgrades, particularly during a budget stalemate between 2015 and 2017.
Since then, more than $500 million in additional payments have flowed into the state pension system, as well as more than $1 billion into a rainy day fund. Another $1.8 billion in tax relief, given in the form of rebate checks and tax exemptions, was also passed with revenues exceeding expectations during this period.