SPRINGFIELD- It’s smart to budget money aside in case of an emergency. Illinois’ rainy day fund could cover the state’s needs for one tenth of a day.
The rainy day fund is a system designed to prevent tax cuts or hikes during sudden drops in revenue. For example, in 2002 nine states fully depleted their rainy day funds in response to the Great Recession.
In 2017 Illinois lawmakers agreed to pull money from the rainy day fund in order to continue funding social services during the budget battle, according to IL News. Now the rainy day fund is barely a fraction of what it used to be.
Most states have been adding to their rainy day funds, according to Justin Theal of The Pew Charitable Trusts. On average state’s rainy day fund will last 23.2 days. Wyoming has the largest rainy day fund at 366.7 days. On the exact opposite end of the spectrum is Illinois, which could last .1 days off its rainy day fund. Iowa is sitting above the national average at 31.8 days.
Credit rating agencies track the maintenance of rainy day funds, which might make it expensive to borrow in the future.
“Having a robust rainy day fund is something that the credits agency very closely,” Theal said in a interview with IL News.
Gov. J.B. Pritzker’s budget proposal for the coming year proposes to put $100 million into the state’s Budget Stabilization Fund annually, but only after passing a progressive tax, which can’t take effect until at least 2021.