Faced with rising pension costs and weak revenue growth, Illinois lawmakers began the new fiscal year without a state budget as a bitter, long-running battle on the spending plan went into overtime.
The deadlock between the Democrat-controlled legislature and Republican Gov. Bruce Rauner could freeze state workers' paychecks if an agreement isn't reached soon.
Facing a union lawsuit to force those payments, state Attorney General Lisa Madigan said the Illinois Constitution bars the state from spending money—even to make payroll—and without a budget "even a court cannot order all of these payments to be made."
Illinois isn't alone in failing to enact a state budget on time.
As of the July 1 budget deadline, Pennsylvania, Wisconsin and three other states had failed to pass a budget. The Wisconsin Legislature's finance committee, however, completed revisions to the state budget plan in early morning hours on Friday, clearing the way for a full vote by the Legislature.
North Carolina, New Hampshire and Massachusetts were only able to enact temporary spending plans before the fiscal year ran out. About a half dozen others approved budgets only at the last minute after contentious squabbling in extended sessions. (Alabama begins its fiscal year on Oct. 1.)
This year's annual fiscal battles have been complicated by a variety of local issues, but many states are wrestling with the same financial pressures. Budget balancing has grown increasingly difficult thanks to rising pension and health-care costs, relatively weak revenue growth and the ongoing aversion to any mention of a tax increase by voters and businesses.
While an improved economy has helped boost job growth, states have seen revenues recover much more slowly. Many are also feeling the effects of the end of federal stimulus spending, which helped fill in the revenue shortfall that followed the Great Recession. As a result many states have not seen revenues recovery to their prerecession levels, according to a state-by-state analysis by Pew Charitable Trusts.