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Illinois gets increasingly more federal funds year after year, still deficit spends

Illinois Watchdog.Org

Friday, July 27, 2018  |  Article  |  By Greg Bishop

Budget--State (8) , Medicaid, Managed Care McSweeney, David--State House, 52
Despite a steady increase of federal funds in the three years through fiscal 2016, Illinois continues to deficit spend.

Pew Charitable Trusts reports Illinois’ share of federal funds as part of the state budget is below the national average but has increased over the past several years up to 2016. Project Director Anne Stouffer said federal funds for things like Medicaid and road construction made up 28.8 percent of the state budget. Illinois was among states where health care grants were a main driver of the increase.

“The state is receiving more Medicaid funding because of expansion or enrollment or increased costs,” Stouffer said.

Despite an increase of federal funds over three years, Illinois’ annual financial reports show the state spent $12.5 billion more than it brought in from fiscal 2013-2016.

State Rep. David McSweeney, R-Barrington Hills, said Illinois isn’t doing enough.

“Our percentage is too low and we’re not doing the innovative types of waivers ... to try and maximize the federal matching funds,” McSweeney said.

McSweeney suggests getting a federal waiver for able-bodied people to work in order to get Medicaid, vouchers for certain segments of the population, and also making sure to address waste and fraud. But it’s also about finding cuts, he said.

“It’s a combination of bringing in additional dollars in legislative action through innovative waivers, but also cutting costs,” McSweeney said. “That’s got to be part of it.”

Illinois also needs a statewide capital construction plan, McSweeney said, something the state hasn’t had since 2009. But he said there needs to be administrative cuts there as well. He also wants a construction bond deal without a tax increase, suggesting legalizing sports betting for an estimated $300 million of additional state revenue.

“If we’re going to do it, that would actually be a source of revenue that’s not a tax increase that you can tie in for roads,” McSweeney said. “And if you do that, you can maximize the federal fund.”

Pew Charitable Trusts’ latest report showed states across the U.S. as a whole for fiscal 2016 got back 32.6 percent from the federal government, the third highest rate since 1961. But it varies across states, with Mississippi getting the highest at 43.3 percent while Illinois was below average at 28.8 percent.

Stouffer said there are a couple of factors involved in the different percentages, such as federal funds coming in for programs driven by population statistics like poverty rates. State revenue outside of federal funds is also a factor.

“So if you’re a state that has a high state revenue base through revenue they bring in through either taxes or fees and other charges, then that will affect your actual ratio versus if you’re a low revenue state" which would make the number higher, Stouffer said.

Mississippi’s 2016 CAFR shows the state brought in $16.4 billion in state and federal revenues, $7.5 billion from federal sources. Despite that, Mississippi spent $16.7 billion, $268 million more than it brought in.

Illinois’ 2016 Comprehensive Annual Financial Report shows the state brought in $62.2 billion in state and federal revenue, $21.7 billion from federal sources. Despite that, Illinois spent $66.3 billion, $4.1 billion more than it brought in.

Most recent audited financials for fiscal 2017 shows Illinois bringing in $158 million more in federal funds from the prior year, but the budget still overspent by $4.1 billion.