Nonetheless, Illinois Comptroller Loleta Didrickson is trying gamely to get Illinois citizens — Gov. Jim Edgar and legislators among them — to start paying attention to the soporific subject, which she believes has been a key factor in the state's recent fiscal woes.

The topic is "so dull and dry and boring sounding," Didrickson concedes freely. But the comptroller also believes it's "a bottom-line issue" if the state is to get a handle on its budget problems. With that in mind, she's pushing lawmakers to approve reform legislation this fall to correct what she considers the shortcomings of the current system that encourage budget-padding and wasteful spending.

Before examining the case she makes, however, a brief refresher on Illinois budget practices might be in order.

The state's budget year begins on July 1 and runs through June 30. During that time, entities from lofty constitutional officers to obscure review panels are empowered to spend money under the budget for that fiscal year. The document itself consists of thousands of separate line items, each authorizing a particular entity to spend up to a certain amount from a specified fund for a given purpose.

Agencies may use their budget authority to commit the state to pay for goods and services — or to send money to schools, welfare recipients or others — until June 30. When the fiscal year ends, no more obligations may be incurred against a line item, even if the amount is not used up. That proviso, Didrickson says, encourages "an orgy of spending" at the end of a fiscal year by directors who fear future cuts at the hands of legislative budget-makers if they leave anything unspent.

Outstanding bills incurred during a fiscal year may be paid, though, during the lapse period, the three months that follow the fiscal year. This window lets directors afflicted with what Didrickson calls a "spend it or lose it mentality" order airline tickets, stamps, computer equipment, you name it, at the last minute, then pay for them after July 1.

Yet sound reasons exist for having a lapse period, despite such abuses. Bills for items purchased or services rendered near the end of a fiscal year may not arrive until after June 30, for example.

Or there may be questions about a bill that can take until the new fiscal year to resolve. So lapse period spending should be no big deal — as long as enough cash is available on June 30 to cover all the old bills from the previous fiscal year.

Unfortunately, only twice in the last 15 years has the balance in the general funds — the state's main checking account — been large enough on June 30 to cover all outstanding obligations. The rest of the time, old bills were paid off with revenue from the new fiscal year, effectively rolling over state obligations from one fiscal year to the next, thereby sidestepping the state constitution's requirement of a balanced budget.

The situation peaked in fiscal year 1992, which ended with an available general funds balance of only $131 million to cover more than $1 billion in lapse period spending. The ensuing $887 million budget deficit was greater than the $718 million in new revenue collected in FY '93, so that the old bills soaked up every penny of the new money and then some. As a result, more than $800 million in FY '93 bills were rolled over into FY '94. The cycle has been ongoing, although by the end of FY '95 the budgetary deficit had shrunk to $341 million, the smallest gap of Edgar's five-year tenure. The red ink, though, is projected to spread again in FY '96.

A budgetary deficit is more than an accounting curiosity, of course. In real terms, the lack of cash to pay bills on time

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To attack the problem, Didrickson is pushing legislation to curb the most flagrant excesses. Its provisions would:

• Require agencies to receive goods and services before the end of the fiscal year in which they're ordered, if the bills are to be paid in the lapse period.

• Permit lapse period payment for equipment worth $35, 000 or more only if the order was placed before February 1.

• Reduce the lapse period to two months, ending on August 31.

"The bottom line is that it's going to force agencies to think about their spending needs and cut down on the estimated millions that they put into the budget — padding it — that is unnecessary spending paid for out of the next fiscal year's revenue," said Didrickson. "That's the abuse that we want to correct."

Though the legislature rebuffed similar efforts by Didrickson's predecessors, her proposal is a good start toward clearing away some of the smoke and mirrors that can shroud Illinois finances.

In a larger sense, though, the state's chronic budgetary deficits are not the work of spendthrift bureaucrats. In the last four years for which full information is available (FY '91 through FY '94), lapse period spending for operation lines like travel, postage and equipment (excluding salaries, retirement and group health care) averaged about 15 percent of total lapse period spending, roughly $125 million a year. During the same period, lapse spending for grant programs like Medicaid, school aid and a host of social services averaged some $587 million a year, or about 70 percent of the total.

Behind those deficits were conscious decisions by the governor and legislative leaders that some red ink was less painful than raising taxes high enough or cutting programs deep enough to keep the state in the black. As long as that calculus prevails, so will budgetary deficits cloaked in lapse period spending. 

Charles N. Wheeler III is director of the Public Affairs Reporting program at the University of Illinois at Springfield.

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