| CHICAGO, March 7
CHICAGO, March 7 The hole in Illinois' general
funds budget deepened to $9.6 billion in fiscal 2016, an
increase of $2.7 billion from the previous year and the biggest
deficit in at least 10 years, according to the state's annual
audit released on Tuesday.
As a 20-month impasse over the budget continues between
Illinois' Republican governor and Democrats who control the
legislature, the state's finances are in a freefall.
While the fiscal year that ended on June 30 marked the 15th
straight year the state budget ended in the red, the deficit has
grown 43 percent just since fiscal 2014. The fiscal 2016 gap
surpassed a $9.1 billion deficit reached in fiscal 2012.
Illinois, the only state to lack a complete budget for two
consecutive fiscal years, is operating on court-ordered spending
for healthcare, social services and payroll, as well as ongoing
appropriations covering pensions and debt service on bonds. A
massive bill package to end the stalemate is on hold in the
State Comptroller Susana Mendoza, a Democrat, called
Illinois' finances "abysmal."
"During Governor (Bruce) Rauner’s first two years in office,
our state moved from a budget impasse to a budget crisis," she
said in a statement on Tuesday. "This third year of his
administration has the makings of a complete financial
The nation's fifth-largest state is unable to generate
enough cash from its current revenue structure to pay operating
expenses on time, Mendoza's audit letter said. Illinois is also
struggling with a $130 billion unfunded pension liability, a $33
billion unfunded liability for state retiree healthcare and an
unpaid bill pile currently at $12 billion.
As a result, Illinois' credit ratings have been downgraded
to the low investment-grade level of triple-B and are the
weakest among the 50 states.
Illinois already pays a big penalty in the U.S. municipal
bond market, where its so-called credit spread over the market's
benchmark yield scale for AAA-rated 10-year bonds stood at 213
basis points on Tuesday, the widest spread of any state.
According to Illinois' auditor general, the state's net
position, which takes into account total liabilities like
pensions and total assets such as buildings, infrastructure and
equipment, deteriorated to a negative $131.6 billion in fiscal
2016 from a negative $125.3 in fiscal 2015.
Illinois had the worst net position of the 38 other states
that filed their annual audits by the end of February, the
auditor's office reported.
(Editing by Matthew Lewis)