CHICAGO — llinois retained its position as the state with the worst overall net financial position based on governmental activities among more than 40 reviewed by the Illinois auditor general for fiscal 2014, highlighting the uphill battle faced by new governor Bruce Rauner.
The state was one of two that recorded a net negative position based on an accounting of assets, according to Auditor General William Holland's opinion on the state's comprehensive annual financial report for fiscal 2014.
Illinois' audit offered some mixed news. The net position of governmental activities which measures assets against liabilities showed no signs of reversing a downward slope. It further weakened in fiscal 2014 with the deficit growing by $1.3 billion to reach a negative $49.2 billion.
Assets totaled $45.1 billion and liabilities hit $94.3 billion. The growth in the state's deterioration was slightly worse than the $1.2 billion added to the deficit in fiscal 2013 although it's still at a slower clip than the $3 billion it grew by in fiscal 2012 and the $6.1 billion added in fiscal 2011.
Its steepest jump was from $29.5 billion in 2009 to $37.5 billion in 2010, before the 2011 income tax hike was passed and revenues picked up steam. The higher rates partially expired on Jan. 1.
Illinois lawmakers must tackle a $1.6 billion deficit in its current budget that runs through June 30. Rauner, a Republican, and the Democratic majority in the General Assembly have yet to settle on a plan. Rauner has proposed a $32 billion general fund for fiscal 2016 that eliminates what he estimates is a $6.6 billion deficit through cuts and pension reform and healthcare savings without any new tax hikes. Illinois is the weakest rated state at the low single A level and it carries a negative outlook from Fitch Ratings, Moody's Investor Service, and Standard & Poor's.
The net asset figure provides one measure of the state's fiscal health. It counts liabilities such as bonded debt and pension obligation against assets such as cash, investments, and other state holdings, "Over time, increases and decreases in net position measure whether the State's financial position is improving or deteriorating," the opinion notes.
The state continued to made headway in chipping away at its general fund deficit which declined by $658 million to a negative $6.7 billion. The state has long recorded a general fund deficit although it has managed to trim some of the red ink in the last two years. In addition to the $658 shaved off the deficit in fiscal 2014, it trimmed $1.7 billion in fiscal 2013. The deficit hit a high of $9.1 billion in fiscal 2012.
The only other state to record a negative net asset position was Massachusetts which was $29 billion in the red. Texas was in the strongest position, posting a surplus of $119.4 billion. The report did not include information from seven states as their financial reports were not available by March 11, according to Holland's opinion. It did include information from the District of Columbia.
The opinion also reported $160 million in interest payments made by the state due to its backlog of bills in that fiscal year. The state closed out fiscal 2014 with $3.45 billion in unpaid bills due to its cash flow struggles, including $1.9 billion due to outside vendors.
"We recommended the governor work with the General Assembly to improve the state's control over State finances in a manner that eliminates significant payment delays and unnecessary interest payments to state vendors," the opinion reads. The state's current bill backlog is up to $5.8 billion, according to Comptroller Leslie Geissler Munger's daily ledger.