Revised budget estimates from a state agency reveal that Illinois could see a revenue surplus of more than $1.5 billion in the next fiscal year, and Gov. J.B. Pritzker is proposing to use those funds to bolster the state’s savings and pay off a variety of debts.
According to a press release from the Governor’s Office of Management and Budget, additional projected revenues have led Illinois officials to project a $1.7-billion net surplus in fiscal year 2023 for the general funds budget.
As a result, Pritzker is seeking to make deposits of $1.3 billion into the state’s “rainy day fund,” which would more than double its current size to $2.3 billion.
Currently, the fund has $1.045 billion, the highest since its creation, but Pritzker’s office says it’s among the smallest rainy-day funds in the U.S.
Pritzker would also seek to use the additional revenue to pay off bonds issued in 2010 to help the state combat the Great Recession. Approximately one-third of the $1.5 billion borrowed remains outstanding.
“Illinois’ bills are being paid on time, we have over $1 billion in our rainy-day fund, our credit ratings are up and we are honoring our commitments to long-term financial liabilities by contributing extra to Illinois’ pension systems,” Pritzker said in a statement. “We’ve closed a seemingly insurmountable structural deficit that I inherited, and together we are securing Illinois’ long-term financial stability and providing economic opportunities to its citizens.”
Illinois Comptroller Susana Mendoza says she “wholeheartedly” endorses Pritzker’s plan, but also called for the General Assembly to make funding the Rainy Day Fund and the Pension Stabilization Fund annual obligations.
“Any urge to spend one-time revenues on new programs must be resisted,” she said. “Now is not the time to spend. It is time to shore up our reserves and continue exhibiting strong financial discipline.”
According to the GOMB’s report, a budget surplus of $357 million is currently projected for fiscal year 2024, with a significant reduction in the projected deficit for fiscal year 2025.
Original projections, released in Oct. 2019, had the projected deficit at $3.2 billion, but the new projections have that deficit at $384 million, according to the GOMB report.
In recent years, Illinois has received several credit upgrades from both S&P Global Ratings and Fitch, with increased savings and payments into the state’s pension system cited by the boards as they explained their rationale.
Better credit ratings can enable the state to borrow money at lower interest rates, potentially saving millions, according to officials.
Prior to the Pritzker administration, Illinois had received a series of credit rating downgrades, especially during a budget impasse between 2015 and 2017.
Since then, more than $500 million in additional payments were made into the state’s pension system, along with more than $1 billion into a rainy-day fund. Another $1.8 billion in tax relief, passed in the form of rebate checks and tax waivers, were also passed with above-expected revenues during that time.
Read More: Pritzker Proposes Using $1.7 Billion Revenue Surplus to Bolster Illinois’ Rainy Day, Pension Funds