The Illinois fiscal crisis is only going to get worse, and the solution is becoming more difficult by the day.
As you probably know, the General Assembly and the governor have not yet agreed on a full state budget. But because of various federal judicial orders, a signed education-funding bill, and several ongoing statutory "continuing appropriations" (debt service, pension payments, legislative salaries, etc.), the government is on pace to spend billions of dollars more than it will bring in this fiscal year.
Guesstimates have been tossed around by various folks that the state could run out of money by March or maybe April if no formal budget agreement is reached. That's because all the judicial orders etc. are based on last fiscal year's budget, but last year's budget was based on revenue from a 5-percent income tax - which automatically fell to 3.75 percent in January.
Long term is grim, but so is the short term.
On August 18, federal District Judge Sharon Johnson Coleman gave the state three days to make July's-$120 million payment for services to developmentally disabled people.
But Illinois Comptroller Leslie Munger claimed there wasn't enough money in the state's "checking account" to meet state payroll; make required bond, pension, and school payments; fund other federal consent decrees; and comply with Coleman's order.
A partial payment of $70 million was made earlier last week, and the rest was paid a few days later after Coleman threatened the state with a contempt-of-court citation.
And things are only going to get worse. The comptroller's people say their office sets aside about $540 million a month for state pension payments. The comptroller's office estimates that by November or December, the state will not have enough money in the bank to make its monthly pension payments.
But they can't even start working on a fiscal solution until Governor Bruce Rauner's demands about his anti-union "Turnaround Agenda" are met.
And the problem with agreeing to any of Rauner's ideas is that everybody figures he will attempt to hold up next year's budget for even more anti-labor stuff.
One theory (on both sides) has long been that this thing has to play itself all the way out so that we don't have to go through it ever again. Therefore, the Democrats may wait to see what the governor does when the state's prisons run out of food, or the government literally runs out of money. Rauner may wait to see what the Dems do when private human-service providers fold en masse.
So they'll likely keep circling each other, throwing jabs and issuing taunts. They're basically just attempting to run out the clock on each other, creating diversions until "doomsday" is finally reached.
But every day they wait will make it that much tougher to craft a final budget deal.
Rauner essentially agreed in private months ago to a one-percentage-point income tax-hike - from the current personal rate of 3.75 percent to 4.75 percent - if they can first reach a deal on his Turnaround Agenda.
Let's just say a miracle happens and they come to terms by the first week of September. To bring in the same amount of revenue as a full-year one-percentage-point hike, the effective tax rate over the fiscal year's remaining 10 months would have to be significantly higher than 4.75 percent.
And now factor in candidate petition filing, which begins September 1 and runs through November 30. How do you convince Republicans and Democrats to vote for a tax hike while petitions are on the streets?
That's why Senate Republican Leader Christine Radogno said not long ago that she didn't see a resolution until December. But if they wait until December, when a three-fifths majority would still be required to pass a new budget, why not just wait until January, when a simple majority would only be required?
If that happens, then the income-tax rate on January 1 - halfway through the fiscal year - would have to be 5.75 percent to produce the same revenues as a 4.75-percent rate back on July 1.
And what if they wait until the state runs out of money, sometime after the party primaries end? You don't even want to know what the tax rate would have to be.
The other option is to not raise taxes that high and just postpone billions of dollars in state bill payments. I'm not sure which is worse.
Rich Miller also publishes Capitol Fax (a daily political newsletter) and CapitolFax.com.
