State of the State: Illinois in 2011

This is the third of a ten-part series on the 2011 State of the State (SOTS) speeches in states with the ten worst projected relative budget deficits for FY 2012. Budget data is from the Center on Budget and Policy Priorities’ (CBPP) recent budget report, and SOTS speech text is from Stateline. CBPP’s data on states’ FY 2012 budget deficits as a percentage of their FY 2011 budget is the benchmark for relative budget deficits.

According to CBPP, Illinois is projected to have the second highest absolute budget deficit of any state in FY 2012 totaling $15 billion, and the second worst projected relative budget deficit in FY 2012, at approximately 44.9% of its FY 2011 budget.

On February 16, 2011 Illinois Governor Pat Quinn delivered his 2011 SOTS speech (full text available here). Gov. Quinn begins by highlighting his desire to stabilize the budget “with a comprehensive plan to restrain spending and reform state government.” He cited a number of policy initiatives undertaken over the past year including Medicaid and public pension reform. Moving forward, he emphasizes only using “tax dollars to provide necessary state services… [And increasingly relying] on results-based budgeting.” Below are a few policy specifics from his speech:

  • Economic Development: Gov. Quinn announces the formation of the Illinois Innovation Council, which is essentially a new economic development agency. He cites a wide range of infrastructure investments and commits to expanding rail investment and opening a third airport at Peotone in Chicago’s south suburbs.
  • Government Reform: He promises to create a commission to review and consolidate Illinois’s 868 school districts, and appoint an Illinois Revenue and Reform Commission that would be responsible for rewriting the state’s tax code.
  • Spending Cuts: Gov. Quinn only identifies two specific spending cuts: reducing Medicaid reimbursement rates for hospitals and nursing homes and eliminating state funding for the salaries and office costs for regional superintendents.
  • Tax Increases: He acknowledges the dramatic individual and corporate income tax increases that passed in January, referring to them as the “new revenue law;” and proposes a debt restructuring plan that would refine bill payment and improve competitive bidding processes to help the state address its structural deficit.

Illinois policymakers face a fiscal watershed moment that will be closely watched across the country and around the world. Innovative policies must be leveraged for the Prairie State to survive and thrive through its fiscal crisis. For proven policy reforms, see the American Legislative Exchange Council’s (ALEC) recently published State Budget Reform Toolkit, and Reason Foundation’s Annual Privatization Report 2010: State Government Privatization section.