Illinois
COMMENTRY

Save for a rainy day

What do Illinois, Arkansas, Montana and Oregon have in common? They are the only four states in the nation that have not had the good fiscal, common sense to set up a Rainy Day Fund while the economy is strong.

The time to do this is now, while Illinois is enjoying sustained economic growth with low inflation, low unemployment and healthy revenue projections for state government.

The supportive Taxpayers Federation of Illinois calls the measure "fiscal weather-proofing." Governor George Ryan says the concept represents prudent fiscal management, while House Speaker Michael Madigan says "this initiative promotes fiscal discipline and will ultimately save tax dollars."

Daniel W Hynes

Each of those views is correct, and I believe Illinois is ready to join the other 46 states that have set up dedicated reserve funds for a simple reason — a Rainy Day Fund represents the kind of responsible fiscal management that you and I do with our own family finances every day.

The Hynes proposal (House Bill 417) would set aside an immediate $100 million into a dedicated reserve account with a cap of approximately $800 million. The fund would be used as an emergency cash-flow mechanism if the state's cash balance dipped too low to make daily payments.

A Rainy Day Fund could help improve the state's bond rating (Illinois' lack of a Rainy Day Fund has consistently been cited by bond rating agencies as a factor in determining bond ratings) and provide effective state cash management during the highs and lows associated with the state's cash balance.

Why does this issue matter? One has only to look back to the early nineties, when Illinois state government had to engage in short-term borrowing to meet its obligations. The interest on that borrowing cost taxpayers $88 million. In addition, the state had to delay and cut payments to critical programs.

Consider history. Over the last 22 years, the state has had a budget surplus only four times. Each time, within two years, the state's fiscal condition deteriorated due to a combination of slow economic growth, spending increases and tax breaks. And each time, the state got back on track by either borrowing or raising taxes and fees.

During last Spring's session of the Illinois General Assembly, House Bill 417 sailed through the Illinois House with more than 100 votes and strong bipartisan support. Although the State Senate failed to call the bill for a vote, Governor Ryan announced that passing some form of Rainy Day Fund legislation would be among his top priorities in 2000.

During my first year in office, I discovered widespread support for a Rainy Day Fund. Newspapers throughout the state, including Champaign, Springfield, Peoria, Rock Island, Moline, Rockford, the collar counties and Chicago, have come out strongly for this initiative. Important groups, including the Taxpayers' Federation of Illinois, the Illinois Education Association, the Illinois Federation of Teachers and the Illinois Primary Health Care Providers, have endorsed this measure.

This issue boils down to common sense. If the state saves and invests now, when the economy is strong, we can help avoid emergency borrowing, debt and interest fees if the economy falters. This is also a question of discipline and whether lawmakers will make the choice of saving and investing instead of spending.

But there should be no question about this measure's importance or my commitment to passage. I intend to wage an aggressive campaign for passage of a Rainy Day Fund in 2000, and I welcome your support in this effort.

Daniel W. Hynes was elected Illinois State Comptroller on Nov. 3, 1998, at the youngest age of any constitutional officer since William Stratton was elected Treasurer in 1942. As the state's chief fiscal control officer, Hynes, 31, believes the Comptroller should be a watchdog for taxpayers by keeping them informed about how tax dollars are spent. He encourages readers to check out the Comptroller's web site at www.ioc.state.il.us to learn more about his office and the states fiscal facts.
The opinions and views of guest commentators are their own and may not represent those of the Association of Illinois Electric Cooperatives or the electric co-ops of Illinois.

4  ILLINOIS COUNTRY LIVING FEBRUARY 2000