Economic Policy

Exploration of the intersection of policy and economic trends, public finance, and economic development

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IGPA Experts use cutting edge social science research methods to analyze public policy. Our independent evidence and analysis is non-partisan, data-driven, and based in the best academic scholarship available.
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What happened to Illinois' economy following the January 2011 tax increases?

Authors

  • Andrew Crosby

How did Illinois’ economic activity change after January 2011? Using several years of data compiled by the U.S. Bureau of Labor Statistics (BLS), The Fiscal Futures Project examines three indicators of economic activity: employment, the unemployment rate, and average weekly earnings. Despite Chicago’s stature as a global city, Illinois’ economy is still closely linked to its regional (Midwestern) neighbors. Illinois sells many services (especially business services such as accounting and legal services) to these states, and it purchases many good and services from these states.


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(.PDF 438.08 KB)

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Illinois still has serious fiscal problems after December 2013 pension law changes

Authors

  • Nancy Hudspeth

Illinois has a chronic, structural fiscal problem so huge that it cannot be eliminated by increases in economic growth alone, increases in taxes alone, or—alas— aggressive pension changes alone. In early December 2013 the General Assembly passed, and Governor Quinn quickly signed, a major pension reduction bill. In this brief, The Fiscal Futures Project projects Illinois’ budget gap with estimates of the fiscal impact of the new pension law. The state still has a large structural imbalance after the pension changes.


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(.PDF 512.17 KB)

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Apocalypse now? The consequences of pay-later budgeting in Illinois:

Authors

  • Nancy Hudspeth
  • Andrew Crosby

For years Illinois has been spending much more than could be supported by sustainable sources of revenue and covering the deficit by issuing IOUs. New projections from the Fiscal Futures model put the magnitude of the underlying deficit at $9 billion for FY 2016—and growing thereafter. The accumulated value of all the IOUs issued to pay for past deficits now totals $159 billion. These IOUs represent claims on the state that when paid off will crowd-out spending on other priorities.


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(.PDF 662.8 KB)

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The scarlet letter in the municipal bond market

Authors

  • Tima Moldogaziev

This study shows that Illinois pays an interest rate premium on bonds in excess of its actual default risk due to its poor fiscal reputation.


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(.PDF 450.16 KB)

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Fiscal Futures project documentation: January 2015

Authors

  • Nancy Hudspeth

This report documents the detailed definitions, assumptions and sources of information used by the 2015 versions of the Fiscal Futures all-funds database and model.


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(.PDF 304.82 KB)

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Illinois' FY 2015 budget in review

Authors

  • Nancy Hudspseth

During the Great Recession, Illinois’ fiscal condition deteriorated close to the point of insolvency. By the end of FY 2010, the shortage of cash was so severe that the state was more than seven months behind in paying its bills, which was ruinous for many vendors, service providers, and their employees.


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(.PDF 338.96 KB)

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All bad things come in threes

Authors

  • Martin J. Luby

On top of a shortfall of sustainable revenue to support state spending and a huge backlog of unfunded pension liabilities, Illinois faces a third type of deficit: a lack of funding for future construction of infrastructure projects. This report uses debt affordability analysis to estimate that even if Illinois maintains its currently high debt burden, the state would need tens of billions of dollars in additional revenue to pay for needed infrastructure.


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(.PDF 548.86 KB)

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Improving budgetary practices in Illinois

Authors

  • Andrew Crosby

Illinois does not follow basic principles of sound budgeting recommended by fiscal experts. This research suggests ways that Illinois and other states can reform practices to avoid fiscal crises in the future.

Two reports released by a team of researchers from IGPA and the Volcker Alliance demonstrate ways states can improve transparency and accountability.


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(.PDF 411.66 KB)

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Alternatives to Cook County's 7 percent cap on assessment increases

Authors

  • Daniel P. McMillen

Following large run-ups in residential property values, a recent Illinois law allowed Cook County to cap increases in homeowners’ property tax assessments. The cap expires soon and is up for renewal. One consequence of an assessment cap is a shift in tax burdens from some taxpayers to others. We examine the cap and a number of alternative policies that might achieve the benefits sought by its proponents with fewer negative side effects.


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(.PDF 104.1 KB)

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The effect of demographic change on state and local government budgets

Authors

The impact of an aging society on fiscal institutions has garnered consider-able attention of late, mostly in connection to the federal Social Security program. In the budget year of 2005, federal government spending on Social Security, which provides old-age, survivors and disability insurance, accounted for 4.2 percent of total GDP. If nothing is done to cut the cost of the program, by 2050 it will consume 6.4 percent of GDP.


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(.PDF 811.12 KB)

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