The Illinois state comptroller, Susana Mendoza, reported a significant 55% year-over-year increase in the end-of-year general revenue fund cash balance. This was a result of her office paying the state’s bills in a timely manner, marking a departure from recent years of financial turmoil in the state. The general revenue fund ended the fiscal year with a balance of $1.7 billion, a considerable improvement from the previous year’s balance of $1.1 billion. Mendoza’s efforts have been instrumental in turning around the state’s financial situation, especially considering where Illinois stood just a decade ago.
Roughly a decade ago, Illinois faced a staggering backlog of $8.5 billion in unpaid bills, with warnings of a “recipe for disaster” looming over the state’s financial future. In 2016, the backlog exceeded $10 billion, surpassing previous records and creating further financial strain. When Mendoza assumed office in late 2016, she inherited a backlog of $15 billion in unpaid bills, a daunting challenge for the state’s financial stability. However, through her efforts and collaborations with the administration of Gov. J.B. Pritzker, the backlog steadily decreased, bringing Illinois to a more stable financial position.
Improved Credit Ratings
The state’s financial progress has not gone unnoticed, as rating agencies such as Moody’s, S&P Global Ratings, Fitch Ratings, and Kroll Bond Rating Agency have revised their outlooks and ratings for Illinois. Previously facing triple-B-minus ratings, the state’s improved structural budget alignment, reduced liabilities, and increased budgetary reserves have propelled it into a positive credit trajectory. Despite these improvements, challenges remain with underfunded pension systems and proposed changes to funding levels. Mendoza’s commitment to making extra payments into the pension systems and the rainy-day fund demonstrates a proactive approach to addressing these challenges.
Mendoza has proposed legislative initiatives to further strengthen the state’s financial stability. One such proposal includes automatic monthly transfers into the budget stabilization fund and pension stabilization fund based on revenue growth and bill backlog criteria. Although some of these initiatives have faced obstacles in the legislative process, Mendoza remains steadfast in her commitment to enhancing Illinois’ financial resilience. Additionally, recent legislation permitting the pre-payment of required monthly pension payments showcases innovative solutions to address pension shortfalls and maintain investment portfolios.
Maintaining a healthy cash balance throughout the fiscal year, as noted by Mendoza, has generated significant interest income for the state. This marks a stark contrast to previous years when accumulating interest costs on unpaid bills added to the state’s financial burden. By prioritizing fiscal responsibility and timely payments, Illinois has been able to improve its financial standing and build reserves for future stability. Continued efforts to address pension liabilities, enhance budget reserves, and ensure sustainable revenue growth are essential for sustaining Illinois’ financial turnaround.
The financial turnaround in Illinois, spearheaded by State Comptroller Susana Mendoza, reflects a concerted effort to address past financial challenges and lay a foundation for future stability. Through responsible fiscal practices, collaborative initiatives with state leadership, and proactive legislative proposals, Illinois has made significant strides in improving its credit ratings, reducing unpaid bill backlogs, and enhancing financial reserves. While challenges persist, the progress made thus far serves as a testament to the importance of fiscal responsibility and strategic financial management in ensuring a stable economic future for the state of Illinois.