According to a recent report, despite experiencing a tightening budget, Illinois is better equipped to handle a potential recession than it has been in recent years. The revelation comes from an analysis conducted by The Volcker Alliance, a non-profit organization that promotes effective management of government finances.
The report, which analyzed the fiscal preparedness of all 50 states, awarded Illinois a "B" grade for its reserve funds, marking a significant improvement from the "D" grade it received in the 2019 edition. The grade assesses a state's ability to cover a budget shortfall without borrowing or raising taxes.
However, the report also indicated some areas of concern. Despite the positive grading for reserve funds, Illinois was given a "C" for budget forecasting, and a "D" for legacy costs, or the ability to manage long-term liabilities like pension obligations. Moreover, Illinois was one of only five states to receive a "D" in the last category.
The state's improved fiscal position is attributed to the efforts of Governor J.B. Pritzker and the state legislature, who have worked on building up rainy day funds and reducing the state's bill backlog. The governor's office indicated that the state’s bill backlog had been reduced from $16.7 billion in 2017 to $3.2 billion.
Experts suggest that the increase in reserve funds could help Illinois mitigate the impacts of potential future economic downturns. However, they also caution that the state needs to continue improving its fiscal practices, particularly when it comes to managing long-term liabilities and developing more accurate budget forecasts.
Overall, the report highlights the progress Illinois has made in strengthening its fiscal position, but also underscores the ongoing challenges it faces. The state's fiscal health will remain a critical issue as it continues to navigate the economic uncertainties posed by the ongoing COVID-19 pandemic.