The end of fiscal year 2017 is quickly approaching for the federal government. At the end of September, Congress is required to pass all 12 appropriations bills — something that they have historically failed to do, as our debt nears $20 trillion.
Yet throughout the states, there are similar struggles happening, and the long-term risks for Washington’s irresponsibility come into sharp focus. After a two-year stalemate, Illinois’ Democratic-controlled legislature, along with 15 House and Senate Republicans, came together to override Governor Rauner’s vetoes and pass a budget. In order to curb the massive budget shortfall, the state income tax was hiked dramatically, while a $130 billion shortfall in pension liabilities remains unaddressed along with the $15 billion in unpaid bills the state has accumulated.
Illinois will be forced to issue bonds and borrow from various state accounts to help pay the overdue bills. The state was on the brink of seeing their credit rating fall to “junk” status, which would’ve made them the first U.S. state in history to do so.
Nearly 900 miles east in New Jersey, the state is also having their share of budget problems. Gov. Chris Christie signed a budget just before the 4th of July holiday after a 3-day budget impasse, which resulted in a partial government shutdown.
New Jersey and Illinois are not the only states that are having issues passing budgets. With just hours to go before the new fiscal year began July 1, there were 11 states that had not yet agreed on a budget.
Irresponsible budgeting at the state level has become almost a given, and occasionally the warnings of inevitable fiscal crisis can be easy to ignore. But the all-too-real experiences of several states should serve not only as a warning for them to get their own finances in order but a reminder of what can happen if Washington does not.