A leading voice for bringing fiscal stability to Illinois
For too long the State of Illinois has failed to address its dismal fiscal situation. By consistently using debt to finance operations and failing to make required pension contributions, State government has put our State’s ongoing vitality at risk.
The Covid-19 pandemic laid bare the fragility of the State’s finances, as Illinois had to borrow billions from the Federal government to continue providing critical services. State revenues have begun to recover, and next fiscal year’s budget pays down some debt, but long-standing issues remain unaddressed, particularly pensions. The State's pension systems are funded at approximately 40%, and required payments are increasing, crowding out other critical State spending. Now more than ever the State should implement a comprehensive plan to address its fiscal situation and put it back on the right path.
The State received billions of dollars in federal aid from several economic recovery packages, most recently the American Rescue Plan (ARP). This infusion of cash helped the State avoid a budget crisis and stabilized the State’s finances in the near-term, prompting credit rating agencies to change their outlook on Illinois’ bonds to stable (Moody’s and S&P) or positive (Fitch). The State should build on this progress and use it as an opportunity to develop and implement a comprehensive plan that will provide long-term financial stability.
The Civic Committee recognizes the critical importance of sound fiscal practices and has been a long-time advocate for prudent approaches that will stimulate economic and job growth. Illinois needs meaningful action now.
The Civic Committee has consistently focused on the State’s serious financial issues and the need to develop a comprehensive plan to solve them and change the negative narrative about Illinois. It is through this lens that we analyzed the proposed Graduated Income Tax constitutional amendment, which would not have fully addressed the State’s fiscal problems on its own. In September 2020, we released a statement and policy position describing our opposition to the amendment referendum in the absence of a comprehensive plan. The proposed constitutional amendment was not approved by the voters. Long term fiscal stability will require structural solutions, including a mix of new revenues, spending reductions, and, most importantly, a spirit shared sacrifice. It is our hope that stakeholders across the state can work together to address the serious fiscal challenges which for too long have stymied job growth and economic opportunity despite Illinois’ great assets.
Our 2019 report, Restore Illinois: A Foundation for Growth, lays out a comprehensive plan to put Illinois back on a sound financial footing. It called for the State to fully fund its pension plans, pay down the bill backlog, establish a reserve fund, and balance the State budget. And, it detailed a plan for doing so immediately, without a lengthy process dependent on constitutional amendments or other actions in the future. The report was the result of years-long research and analysis by the Civic Committee’s Tax Policy Task Force, composed of members who are top business leaders in the region.
This latest report followed in a long tradition of calling attention and presenting solutions to the most pressing issues in State finance. In 2017, the Task Force offered its first comprehensive set of solutions to Illinois' financial situation in Bringing Illinois Back: A Framework for Our Future.
The Civic Committee was one of the earliest voices drawing attention to the pension crisis. In 2006, we released Facing Facts saying that Illinois is on its way to financial implosion. We also launched Illinois is Broke to ensure the unfunded pension liability was on every elected leader’s agenda and to make pension reform a key election topic. Because of our efforts, the General Assembly passed a major pension reform bill in 2012; however, it was later deemed unconstitutional.
Over the years, our members have served as leaders in efforts to resolve the critical issues facing Illinois. Lester Crown and Eden Martin served on the Commission to Strengthen Chicago’s Pension Funds. Later, to address the State-level pension crisis, Eden Martin also served on Governor Quinn’s Pension Modernization Task Force.
As a thought leader on State finance, we have produced the following reports that detail the issues and propose solutions:
Just the Facts (2012)
Facing Facts (2006)