CHICAGO - The Institute for Truth in Accounting says they're analzying why S & P downgraded Illinois credit rating again, and found that one indication of a state in trouble is that a state's Comprehensive Annual Fiscal Report (CAFR) being filed late. Illinois' last CAFR was filed 337 days late, a state data report showed, making it the third latest nationwide.
"Those states that file their CAFRs late tend to be state's in financial trouble, and Illinois was late not only in 2011, but for the past few years," Richard Lorenc of the Institute for Truth in Accounting's communications director told Illinois Review.
State Comptroller Judy Baar-Topinka spokesman Brad Hahn responded that the 337 day late CAFR was not the fault of the Comptroller's office, it was that the Illinois General Assembly added six months onto Fiscal Year 2011, moving the closing date from June 30 to December 31.
"Our office sent in the annual report within 150 days from the end of the fiscal year set by the General Assembly," Hahn said. "That's 45 days quicker than the average reporting time. Anyway, the S&P did not mention the CAFR's tardiness as a factor in the recent credit downgrade."
Whether or not the S&P note the tardiness off Illinois' CAFR is probably a side issue to the bigger problem - that the Illinois General Assembly added six months for the state to pay off twelve months of the previous year's bills. And even with the extension, Illinois remained billions of dollars behind and months late in paying bills to its vendors, a definite factor in determining credit rating.
Other factors taken into consideration in determining debt load are the number of lawyers, the share of the state's population that is on Medicaid and how much of the state's employees are unionized. Illinois, which was rated last week by the S&P with the nation's worst credit rating, ranks higher than most states in all those negative factors, as this chart indicates:
The Institute for Truth in Accounting estimates debt loads across the 50 states, producing a metric called Taxpayer Burden. This measure accounts for off-balance sheet liabilities as well as assets available to pay bills, and estimates the resulting debt load on a per-taxpayer basis. From 2009 to 2011, the Taxpayer Burden for Illinois ranked third, third, and second in the nation, respectively.
State Data Lab includes a variety of economic and demographic information helping to put state government finances in context. Some of the data available include measures associated with debt loads across the 50 states. For example, the four measures included in this table– the number of days it takes for a state to file its annual financial report, the regulatory environment (measuring by the number of active and resident attorneys per 10,000 population), the share of Medicaid enrollment in total state population, and the percent of public sector workers covered by collective bargaining agreement – all are significantly correlated with the IFTA Taxpayer Burden. In turn, Illinois ranks higher than the 50 state average on all four of these measures in the latest year for which data are available.
