CHICAGO, June 20 (Reuters) - Illinois’ finances sank deeper into the red in fiscal 2012, with the general revenue fund deficit hitting a record $9.1 billion as increased spending outran a jump in revenue, according to a report released on Thursday by the state auditor general.
The deficit for the fiscal year that ended June 30, 2012, was up $1.1 billion from fiscal 2011 when measured by generally accepted accounting principles, according to the comprehensive annual financial report.
The bigger deficit was driven by a nearly $4.7 billion increase in spending that eclipsed revenue growth of $3.7 billion, the audit said. General fund revenue totaled $37.3 billion.
Illinois’ financial condition continued to be the worst of any U.S. state.
Its assets, including land, buildings, investments, and cash on hand, increased by $3.9 billion over the previous fiscal year, but its liabilities jumped by nearly $6.3 billion mainly because of the issuance of $3.2 billion of general obligation bonds and growing costs for public pensions and retiree health care, according to the report.
That left Illinois with negative net assets of $46.6 billion at the end of fiscal 2012 versus a negative $43.6 billion in fiscal 2011.
Only four other states had negative net assets in fiscal 2012: California, Connecticut, Massachusetts and New Jersey, which was slightly better off than Illinois at a negative $40.4 billion, according to the Illinois auditor.
All of the other states included in the auditor’s report had positive net assets, with Texas at the top with $101.8 billion.
Illinois’ inability to rein in pension costs and its huge backlog of unpaid, overdue bills have led to a series of downgrades by credit rating agencies that have left it with the lowest general obligation ratings among U.S. states.
The legislature’s spring session ended on May 31 with an impasse on pension reform. Lawmakers have agreed to a July 9 deadline to act on a plan to be produced by a legislative conference committee to deal with a nearly $100 billion unfunded pension liability.
Governor Pat Quinn, who has been pushing for a pension fix, has been cutting spending and paying off bills with higher-than-expected April income tax revenue, according to Abdon Pallasch, a spokesman for the governor’s budget office.
He said the bill backlog, which stood at $8.5 billion on April 1, has dropped to $6.3 billion and is on track to fall to $5.9 billion at the end of fiscal 2014. Until the boost in revenue in April, Illinois was running four months behind in paying many of its bills.
Meanwhile, the state is scheduled to sell $1.3 billion of GO bonds next week for its ongoing capital improvement program.
Investors in the $3.7 trillion U.S. municipal market have been demanding higher yields for the state’s bonds. Illinois’ so-called credit spread over the market’s benchmark triple-A scale was 145 basis point for 10-year bonds in the latest week. That is the second highest spread behind Puerto Rico among large muni debt issuers tracked by Municipal Market Data, a unit of Thomson Reuters.