July 11, 2017

#49 | Ranking the States by Fiscal Condition: Illinois

Summary

On the basis of its fiscal solvency in five separate categories, Illinois is ranked 49th among the US states for its fiscal health. Illinois performs poorly on both a short- and long-run basis. The state has between 52 percent and 134 percent of the cash needed to cover short-term obligations. Revenues cover 96 percent of expenses, and overall net position declined by $28 per capita in FY 2015. On a long-run basis, a net asset ratio of −2.77 points to Illinois’s heavy reliance on debt. Long-term liabilities are 317 percent of total assets, or $12,118 per capita. On a guaranteed-to-be-paid basis, unfunded pension obligations are $344.85 billion, or 54 percent of state personal income. OPEB is 8 percent of state personal income.

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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 46th.)
  • 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 20th.)
  • Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities and OPEB liabilities 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

To read all our work on Illinois, go to mercatus.org/states/illinois.