Back in 1981, the Chicago Cubs finished the year with 38 wins and 65 losses, coming in last in their division. That seemed to be the norm, back then, but times have changed. In 2015, it was like night and day, with the Cubs going 97 and 65 -- the third best record in baseball. This year, expectations are high, with many fans thinking World Series.
Income taxes and sales taxes are the largest general revenue sources for Illinois. What did they look like back in 1981, compared to today?
The Illinois Comptroller’s office recently added a long list of older annual financial reports to its website, going all the way back to 1981. This is a valuable practice, giving citizens a chance to look into the evolution of Illinois’ finances over decades. You can see those reports here.
Have citizens shortchanged Illinois government over time? Is that the reason Illinois government finds itself in such dire straits today?
Hardly.
In the Illinois annual financial report for 1981, citizens reportedly paid income and sales taxes of $5.1 billion. In 2015, they paid a total of $30.1 billion, six times as much as they did in 2015. Personal income has grown over time, to be sure, but nowhere near as fast as the income and sales taxes “earned” by state government. The ratio of income and sales tax revenue to state personal income rose over 30% from 1981 to 2015.
And the sad thing is, as fast as income and sales taxes have risen, that increase hasn’t nearly been enough to cover the growing cost of state government. The 1981 Illinois annual financial report showed about $8 billion in total liabilities. In 2015, that reported debt had mushroomed to $188 billion.
Think about that. Sales and income taxes were six times as high in 2015 as they were in 1981, while the liabilities reported by Illinois in 2015 were about 20 times as high as they were in 1981.
Part of the story, of course, is the fact that state leaders allowed massive pension debts to accumulate off the balance sheet. In 2015, the state reported a new “net pension liability” of $108.9 billion – a debt it previously didn’t show on the balance sheet because of flawed government accounting standards.
From 2014 to 2015 alone, the state’s reported liabilities almost doubled, as a new standard was implemented. Of course, the debts didn’t really double, it was just a matter of rectifying past deceptive reporting.
But that is part of the story. For decades, even while income and sales taxes were taking in a greater share of state personal income, the state accumulated hidden massive debts anyway.
Debt now looms over Illinois. And more and more people have been looking for friendlier confines.