Does the Illinois Constitution mandate that the state budget be balanced each year?

One’s initial inclination is to respond, “Yes, of course, it says so in the Finance Article.” But a quick check of the actual record in the four decades since the charter was ratified suggests the answer is a bit less straightforward.

The question gained new interest a few weeks ago after House Speaker Michael Madigan acknowledged to reporters that the spending plan newly minted by legislative Democrats was not balanced.

“Will there be people who would say the budget is not in balance? That’s correct, because we are in a depression,” the speaker said.

While his candor may have been refreshing, Madigan was merely stating what was obvious to anyone paying attention, as lawmakers for the second year in a row chose to let Gov. Pat Quinn make the painful cuts needed to align spending more closely with revenues.

How bad are things? The mismatch exceeds $12 billion, according to the Center for Tax and Budget Accountability, a nonpartisan think tank. That is more than 40 percent of the total $26.3 billion appropriated from the state’s main checkbook account.

So is the spending plan null and void, as some have suggested, because the Constitution requires that the budget be balanced?

Not really. Consider the language of Article VIII, Finance, section (b): “The General Assembly by law shall make appropriations for all expenditures of public funds by the State. Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year.”

The language clearly says that lawmakers can’t authorize spending more money in a budget year than they expect the state will have available to cover that spending during that year. Strange as it may seem, the out-of-whack plan lawmakers sent to Quinn in May passes. At $26.3 billion, the general funds appropriations fall short of the $26.7 billion expected to be available in FY 2011. In addition, lawmakers approved a trio of one-time ploys — offering amnesty to delinquent taxpayers, selling long-term rights to the tobacco settlement proceeds and raiding other treasury accounts — to boost the bottom line by $2.5 billion, according to the center.

So, one could argue, the plan meets the narrow constitutional test: General funds appropriations do not exceed the funds estimated to be available this budget year.

Then what’s the catch? The legislature simply ignored certain inescapable expenses, appropriating no money, for example, to cover some $6 billion in unpaid bills from FY 2010, which ended June 30, or to make a required pension payment of almost $4 billion.

While the FY 2011 budget may be perhaps the most egregious example of how lawmakers can circumvent the supposed constitutional requirement for a balanced budget, it’s far from unique.

In fact, the state has not had a balanced budget since 2001, when measured by a traditional yardstick, the so-called budgetary balance concept. Typically applied to the general funds, the technique compares how much is in the bank when a fiscal year ends on June 30 with how much is needed to pay bills still outstanding from that fiscal year during the following two months. If there’s enough to cover the bills, the budget’s balanced; if not, it’s a budgetary deficit.

In the 41 years since Illinois adopted its current practice of annual budgets, starting with FY 1970 and running through FY 2010, the general funds budget has been balanced only 15 times. Most of the black ink occurred in two distinct eras, a six-year stretch from FY 1970 through FY 1975 and a five-year run from FY 1997 through FY 2001.

In each of the other 26 years, the outstanding bills at year’s end outstripped the money available in the bank. The worst deficit came in FY 2009, at a whopping $3.7 billion, more than triple the previous high. That mark could well fall come August 31, when the books finally are closed on FY 2010.

The state’s long history of budgetary deficits shows that the constitutional mandate has had little practical effect in guaranteeing that spending won’t outstrip resources. The record should not be surprising, given that the constitutional provision deals with estimates and has no mechanism to adjust for faulty prognostication.

In the spring of 2001, for example, Gov. George Ryan and lawmakers fashioned a FY 2002 budget anticipating that revenues would increase by about $900 million. Instead, revenues declined by more than $700 million due to recession and the September 11 terrorist attacks. The result was some $1.6 billion less to spend than the budget allocated, leading to a $1.2 billion budgetary deficit, at the time the worst in state history.

At other times, the temptation to fudge the numbers has been hard to resist, tweaking revenue estimates upward to allow more spending, or downplaying the growth in an entitlement program to shoehorn more into a tight budget.

The possibility of such shenanigans was not lost on the delegates who drafted the 1970 Constitution, several of whom had legislative experience.

During floor debate on the Finance Article, delegate Louis Bottino, a former two-term state representative, noted that one of the ways to present a balanced budget “is to take such things as pensions and not appropriate the amount that is necessary for the state to finance its share.”

Did the committee that fashioned the new article consider this? he asked delegate Dawn Clark Netsch, who was presenting the panel’s work to the full convention.

“You are right that there is no way to enforce a standard of absolute intellectual integrity on all of the people who are involved in the state financial management if they choose not to respond that way,” answered Netsch, who went on to become a state senator and who, later, as state comptroller in the early 1990s, had to deal with bills piling up with no money to pay them.

“We have freely admitted among ourselves that you can balance a budget by simply raising your estimates of what the various taxes will bring in,” she told Bottino. “I am not sure the Constitution can really deal with that. In fact, I am sure it cannot really deal with that kind of problem.”

Still a valid assessment, 40 years later.

While the FY 2010 budget may be perhaps the most egregious example of how lawmakers can circumvent the supposed constitutional requirement for a balanced budget, it’s far from unique.

Charles N. Wheeler III is director of the Public Affairs Reporting program at the University of Illinois at Springfield. 

Illinois Issues, July/August 2010