FILE PHOTO – Managing Partner of The Pritzker Group J.B. Pritzker speaks at the Clinton Global Initiative America meeting in Chicago, Illinois, June 13, 2013. REUTERS/Jim Young
CHICAGO (Reuters) – Illinois’ new governor faces a budget deficit that could triple in size, as well as a backlog of unpaid bills that could surpass the state’s record high, according to a new five-year fiscal forecast from outgoing Governor Bruce Rauner.
In January, Pritzker, a billionaire heir to the Hyatt Hotel fortune, will inherit a state with credit ratings just a notch or two above junk due to chronic unbalanced budgets and a $129 billion unfunded pension liability.
The Rauner administration’s economic and fiscal policy report dated Thursday estimated the gap in the current general funds budget could top $1 billion if Illinois is required by a labor relations board to pay as much as $500 million to members of its largest public-sector labor union.
The five-year forecast shows the budget deficit jumping to $2.7 billion in fiscal 2020, which begins on July 1, and to $3.4 billion in fiscal 2021. Illinois’ pile of unpaid bills, which reached a record-high $16.67 billion in 2017, would climb from $7.8 billion at the end of fiscal 2019 to $10.6 billion in fiscal 2020 and to $17.3 billion in fiscal 2022, according to the forecast.
There was no immediate reaction to the forecast from Pritzker’s team on Friday. Following the election, Pritzker said his top priority was a balanced budget as he unveiled a 17-member bipartisan committee on fiscal issues composed of current and former state lawmakers, along with government finance experts and union and business representatives.
As for the $38 billion fiscal 2019 budget, actual savings from a voluntary buyout of pension benefits may fall short of an anticipated $400 million, according to the report. With the fiscal year nearing its December halfway point, Illinois’ three largest retirement systems have yet to launch the program.
On the revenue side, $300 million in one-time revenue from a stalled sale of the main state office building in Chicago has been removed from the budget, while Illinois is banking on increased sales taxes due to a recent expansion of collections to out-of-state internet retailers, the report said.
Reporting by Karen Pierog in Chicago; Editing by Matthew Lewis