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‘Balanced budget’ in Illinois is a fraud

Bill Mitchell

Bill Mitchell

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Updated: March 6, 2013 2:24AM

Time for our Civics Class to come to order again.

Gov. Pat Quinn on Wednesday will propose a state budget for the coming fiscal year, which begins July 1. The Illinois General Assembly will pass a budget this spring. Can anyone tell me whether our state Constitution requires that the state budget be “balanced”?

[Loud guffaws! “Dumb question! Illinois runs huge deficits each year, which is why debt balances keep piling up. We owe $8 billion or so in unpaid bills. Pension funds are almost $100 billion in the hole. Our budget is the farthest thing from balanced!”]

Well, then, it may surprise you to learn that we have a “balanced budget” requirement in our state Constitution. Article VIII (Finance), Section 2, states:

(a) The Governor shall prepare and submit to the General Assembly, at a time prescribed by law, a State budget for the ensuing fiscal year. … Proposed expenditures shall not exceed funds estimated to be available for the fiscal year as shown in the Budget.

(b) . . . Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year.

[I don’t get it. Isn’t a constitution — federal or state — supposed to limit what government can do?]

That’s the idea. A constitution constrains government. Congress cannot infringe protected rights, like free speech and religion. And Illinois cannot have an unbalanced budget.

[So how does Illinois get away with violating its own Constitution year after year?]

There’s no “violation.” Notice the key words here: “appropriations” — and “funds estimated . . . to be available.”

If a private-sector company incurs an expense during the year, it has to recognize the expense, whether it pays the bill or not. That’s called accrual accounting. But not Illinois. Illinois can simply not appropriate money to pay the bill this year.

Also, if a private-sector company has
to borrow money to pay an operating expense, its operating statement shows it runs a deficit. But if Illinois borrows to pay operating costs, the borrowed money is treated as “available” funds. No imbalance is created.

When unfunded pension liabilities pile
up because the General Assembly doesn’t put enough money in the pension funds,
no problem. The state has to have only enough funds to cover “appropriations.” Underfunding pensions is not an “appropriation.”

[So the state can operate on more and
more borrowed money — indefinitely?
What happened to the notion that the Constitution is supposed to limit what government can do?]

Why are you complaining? You should be grateful and comforted when you realize that our Illinois state budgets are always going to be “balanced” — as a matter of logical necessity. If the state appropriates every nickel it has, including every nickel it can borrow, its revenues and appropriations will balance. And if it doesn’t have enough nickels to pay the bills, it can stick the bills in the drawer; then they won’t be “appropriations.” Balance is preserved.

In short, our “balanced budget” provision doesn’t constrain. It enables.

[So why do some conservative Republicans and the Wall Street Journal support enactment of a federal “balanced budget” amendment as a way to solve our nation’s fiscal problems?]

Maybe they’ve never spent any time in Springfield.

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