Illinois

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Summary

On the basis of its fiscal solvency in five separate categories, Illinois ranks 47th among the US states and Puerto Rico for its fiscal health. On a cash basis, Illinois has between 0.63 and 1.39 times the cash needed to cover short-term liabilities. Revenues cover 99 percent of expenses, producing a deficit of $40 per capita. On a long-run basis, a net asset ratio of −1.14 indicates that Illinois is reliant on debt financing to cover spending. Liabilities exceed assets by 48 percent, producing a long-term liability per capita of $6,067. Total debt is $35.55 billion. Unfunded pension liabilities are $298.05 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) are $34.49 billion. These three liabilities are equal to 61 percent of total state personal income.

 

Key Terms

  • Cash solvency measures whether a state has enough cash to cover its short-term bills, which include accounts payable, vouchers, warrants, and short-term debt. (Illinois ranks 48th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Illinois ranks 41st.)
  • Long-run solvency measures whether a state has a hedge against large long-term liabilities. Are enough assets available to cushion the state from potential shocks or long-term fiscal risks? (Illinois ranks 49th.)
  • Service-level solvency measures how high taxes, revenues, and spending are when compared to state personal income. Do states have enough “fiscal slack”? If spending commitments demand more revenues, are states in a good position to increase taxes without harming the economy? Is spending high or low relative to the tax base? (Illinois ranks 25th.)
  • Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities, OPEB liabilities, and state debt compared to the state personal income? (Illinois ranks 46th.)

For a complete explanation of the methodology used to calculate Illinois's fiscal health rankings, download the full paper and the dataset at mercatus.org/statefiscalrankings-2016-edition.