Illinois budget crisis drains savings
CHICAGO -- A stopgap spending plan that lawmakers approved to address Illinois' lack of a state budget for a second straight year is quickly draining the state's "rainy day" fund, focusing more attention on the state's unique and long-running financial management problems.
An account that experts say should have $1.5 to $3 billion to help weather an economic downturn was down to about $180 million as of Friday. In a matter of weeks, the balance in what is supposed to be a savings account will be zero.
Financial watchdogs and at least one major credit rating agency say Illinois' move to drain the $275 million fund to pay for items such as food and medicine for people in state-run facilities in the 16-month absence of a full budget means that when -- not if -- a recession hits, new taxes or spending cuts will have to be even more "draconian."
Using the rainy day fund for cash flow is nothing new in Illinois, where critics say lawmakers have spent decades making politically popular short-term decisions that dug a deeper financial hole. Illinois has hundreds of billions in pension and other debt and is on track to spend nearly $8 billion more than it takes in this year.
Read more: http://www.paducahsun.com/news/general/BC-US--Closer-Look-Rainy-Day-Fund-1st-Ld-Writethru--788678