The Civic Federation just released its 2013 Budget Roadmap, and it will come as no surprise that most of it is bad news. Here’s the chart that worried me the most:
And that chart is putting it lightly; the footnote to Medicaid appropriation notes that the chart merely reflects actual expenditures growing at two percent a year, not what it would cost to bring appropriations up to full funding. So it’s not counting the estimated $21 billion in unpaid bills such a modest increase in expenditures would leave. In FY 2012, Medicaid and pension spending is equivalent to 60 percent of the state’s base operating budget; by 2017, it increases to 73 percent.
The state has been cutting back; Illinois already has a comparatively low state employees-to-population ratio. But as the Civic Fed report points out, the state’s base operating budget cutbacks, which account for most of what we generally think of as what a state does, are just going to get wiped out by pension expenses: “increases in required pension contributions outpace projected declines in all other categories of spending.”
And increasing health costs aren’t just a matter of Medicaid. If health insurance expenses for current state employees continue to expand at the same rate as they did from 2007-2011, they’ll add another $500 million to the state budget:
Someone—I think it was P.J. O’Rourke, or maybe Paul Krugman—called the federal government an insurance program with a military. States, more than we sometimes assume, aren’t all that different. And that’s increasingly the case, as insurance and pension plans make up an increasing percentage of state budgets. And that percentage increases quickly, since general operating expenses and employee headcount are more easily checked than Medicaid (which is partially reimbursed by the federal government under a number of tight regulations) and pensions (which, possible challenges aside, are fixed by law once granted).
In short, the state has taken steps to cut back on programs fully under its control. The next round of budgeting is going to be far more difficult.