Finally a State Budget… Sort Of

The Illinois General Assembly succeeded in passing a “stop gap” budget to avoid, by a few hours, the distinction of going a full 12 months without a fully enacted budget. The measure will allow the State to keep agency operations intact for the next six months.

It also includes full K-12 funding for Fiscal Year 2017; full funding for transportation and capital construction projects and $1 billion in higher education funding.

The larger budget fight looms over the entire state, as the state continues to have $7.8 billion in unpaid state bills and a structural budget deficit that sees expenditures exceed revenues, on average, by about $6 billion annually (or $16 million per day).

The upcoming legislative battle in January 2017 must include resolution on tax increases (income tax rates, sales tax expansion, elimination of income tax credits/deductions, gaming expansion, etc.), spending cuts and business reforms (pensions, workers compensation, tort reforms, and local control of collective bargaining). The dynamic in the legislature, in which a final budget resolution will be the primary focus, is unlikely to change when the legislature convenes its 2016 veto session, the 2017 “lame duck” session, or the 2017 spring session. However, the fact that the Governor and four legislative leaders were able to negotiate and implement a “stop gap” budget deal provides confidence that this process can be repeated going forward.