Illinois' deficit cut in half, financial experts paint a different picture

SPRINGFIELD, Ill. (WICS/WRSP) — Illinois' latest Comprehensive Annual Financial Report, or CAFR, shows Illinois’ deficit was cut in half during fiscal year 2018.

However, some financial experts are painting a different picture.

In fiscal year 2018, Illinois had a deficit of roughly $7.7 billion, down from $14.6 billion in 2017.

The Comptroller's Office credits bonds that were used to refinance the state debt at lower interest rates.

"Illinois is in a better position than it was a year ago. We have a budget that's as balanced as it's been in many, many years,” said Abdon Pallasch, director of communications of the Illinois Comptroller’s Office. “It's hard to call it completely balanced when we have that backlog of unpaid bills of $6.5 billion, but it's a lot better than in years past."

However, some financial experts see it differently.

"When you understand how we reduced our deficit, it's only because we borrowed more,” Robert Gordon and Associates CPA Bob Gordon said. “So we borrowed our way out of debt and there's no better way to get yourself in worse financial condition than to keep doing that. We've been doing that for a long period of time in Illinois."

Adam Schuster, with the Illinois Policy Institute, adds that the CAFNR report shows Illinois’ net position has gone down. He said Illinois has not recovered from the 2008 financial recession the same way other states have.

The Illinois Policy Institute said pension reform is one of the biggest steps the state could take in working its way out of debt.

Political science experts said they think this report shows Illinois heading in the right direction.

"Shifting from short-term, high interest to long-term, lower interest was certainly a prudent move to make,” University of Illinois, Springfield professor emeritus Kent Redfield said.

But, Illinois still has a long road to recovery.

"We have a long way to go until we're going to be able to both completely stabilize what we're doing as far as the state's finances and then try to get the state in a better position,” Redfield said.

The Comptroller’s Office said a graduated income tax would help the state pay off debt. That will be on the ballot for voters to decide in a year from November.

The largest expenditures in Illinois were in health and social services and education. Pension benefits are currently the state's largest liability.