A new report from Illinois Auditor General William Holland shows the state’s deficit is the worst in the country for the second consecutive year.
Illinois' deficit was at $37.9 billion for fiscal 2010 and $43.8 billion for fiscal 2011.
The report, issued June 21, 2012, covers the fiscal year which ended June 30, 2011.
The report also says weaknesses in the state’s financial reporting processes adversely affect the state’s bond rating and jeopardize federal funding.
“We recommended the Office of the Governor and the Office of the State Comptroller work together to resolve the State’s inability to produce timely and accurate GAAP (generally accepted accounting principles) basis financial information and a Statewide SEFA (Schedule of Expenditures of Federal Awards),” the report states.
The audit noted 16 material weaknesses and 28 “significant deficiencies” related to accounting controls at 13 state agencies. The lacking controls led to restated balances and “material misstatements” in the millions of dollars.
Auditors found a deficit balance of more than $1.5 billion in the Income Tax Refund Fund “because the State did not allocate sufficient income tax revenues into the Income Tax Refund Fund.”
The report says the governor’s office agreed with the need for improved financial reporting, but the governor’s office stopped short of admitting to insufficient controls.
“The Governor’s Office’s response noted that the Office recognizes that significant balances are owed at year-end but does not feel that this is the result of the administration’s insufficient controls over finances. The Office attributed the unpaid
bills as a result of decades of fiscal mismanagement as well as the economic downturn and diminished revenues,” the report said.
The auditor agreed the economic conditions have contributed to the state’s financial weakness.
A question that comes up because of the debt is whether people would move to the Iowa side of the Quad Cities because of the debt. News Eight talked to many realtors in the area Thursday. They said they haven't seen a mass exodus for Iowa.
"I don't see people doing that," Mel Foster Real Estate Agent Paula Webb said. "It seems like people who've grown up in Illinois are very loyal, and they like to stay."
Iowa on the other hand, had a surplus of $8.2 billion in its "net assets of government activities." Nonetheless, many loyal Illinois residents say they won't be leaving for 'greener pastures.'
"There's nothing that the state can do that's going to make me leave here," Moline resident Dan Mathis said. "There might be other things that I leave here for, but the state can't do anything to make me leave."
Credit agencies have threatened to dock the status from 'AAA' to 'AA.' The state is expected to go into some sort of special session in Springfield later this year to solve its pension problem.