CHICAGO – Illinois’ overall financial condition deteriorated in fiscal 2015 as tax collections fell, with the state recording its fourteenth straight budget deficit, according to an annual audit released on Tuesday.
The nation’s fifth-largest state ended fiscal 2015 on June 30 with a general fund deficit that grew to $6.9 billion from $6.7 billion in fiscal 2014, the comprehensive annual financial report by Illinois Auditor General Frank Mautino showed. A temporary income tax hike enacted in 2011 partially expired midway through fiscal 2015, decreasing collections by $1.8 billion.
“The state continues to show an inability to generate sufficient cash from its current revenue structure to pay operating expenditures on a timely basis,” the audit said.
It also warned that budget deficits, along with growing unfunded liabilities for pensions and retiree healthcare, and credit rating downgrades “may impact the state’s ability to access credit markets to pay operational expenditures more timely and may increase interest costs of those borrowings.”
Illinois, which already pays a big penalty in the U.S. municipal bond market, has the worst-funded pensions and the lowest credit ratings among the 50 states.
The state is in its 10th month without a full fiscal 2016 budget due to an impasse between its Republican governor and Democrats who control the legislature.
Lawmakers returned to session this week after their spring break without any deal in sight for a fiscal 2016 or 2017 budget.
The state’s liabilities, led by a $108.6 billion unfunded pension liability and $32.5 billion in payments due on bonds, dwarfed nearly $22 billion in assets, including buildings, infrastructure and equipment, resulting in a net deficit of $125.3 billion compared with $121.2 billion in fiscal 2014, the audit said.
This left Illinois in the worst shape of the 42 U.S. states that have filed fiscal 2015 audits. Of the seven states that ended the fiscal year with a net position in the red – a list that also includes New Jersey, California and Kentucky – Illinois had the largest overall net deficit.
Illinois’ budget stabilization fund was unchanged at $275.7 million, an insufficient amount to address cash management needs, according to state Comptroller Leslie Munger. Her office reported a $6.58 billion unpaid bill backlog on Tuesday.