STUMP » Articles » How to Lie With Budget Statistics: Pritzker and Hynes Edition » 8 February 2019, 14:43

Where Stu & MP spout off about everything.

How to Lie With Budget Statistics: Pritzker and Hynes Edition  

by

8 February 2019, 14:43

I was going to put this in Taxing Tuesday for next week, but this has pissed me off so much, it gets its own post.

On Friday afternoon, I saw this:

Pritzker: Illinois deficit more than Rauner estimated

The gap for the upcoming fiscal year will be $3.2 billion, the governor’s office says, 16 percent higher than a November estimate.

Let’s stop there.

So, before, you merely thought the gap would be $2.8 billion. Out of a budget of how much?

“Illinois will need years to dig out of the fiscal mess this administration inherited, and the road to recovery will begin with Governor Pritzker,” Deputy Governor Dan Hynes said in a statement, which said he wrote the report. “The Pritzker administration will be honest and transparent about the challenges we face and put forward long-term plans and investments that will get our state on firm financial footing. Despite these challenges, we will propose a balanced budget that invests in education and human services that were decimated under the previous administration.”

That is: hey, rich people — get ready to be soaked!

(In addition: not-quite-so-rich people— get ready to be soaked)

The “report”, such as it is, is at this link. I will embed it, because – why not?

Digging out by on Scribd

I want to pull out some items and/or ask some questions.

WORKING THE NUMBERS: WHAT ARE APPROPRIATE COMPARISONS?

Rebuilding a strong financial foundation for Illinois will take more than one year, or even one gubernatorial term. The current administration is committed to working diligently and across party lines to put our state on a path to fiscal stability. That starts with an honest accounting of the budgetary and administrative challenges that now exist – and that this administration will work to fix. Left unaddressed, the State of Illinois is facing a $3.2 billion budget deficit in FY20, exceeding the previous administration’s November 2018 estimate of $2.765 billion by nearly $500 million. This enormous deficit – nearly 9 percent of the state’s General Funds revenue collections – was compounded by the disastrous future financial ramifications of Governor Rauner’s approach. The missed opportunities are staggering; the investments in human capital that we have foregone are tragic.

For what it’s worth, I don’t mind Rauner being blamed (he may have some remarks, but I don’t care).

But I want to get a handle on relevant comparisons for these numbers.

So, the difference between $3.2 billion and $2.765 billion is about $440 million (which does not round to $500 million, thanks for playing.) Fine. The $3.2 billion is indeed 16% higher than the prior projection. (Note: I’m using rules of significant figures and rounding… these are all estimates anyway.)

But that’s $3.2 billion or $2.765 billion out of a budget of how large? Just because these are big numbers (and they are), it’s not clear to me that the projected amounts are really all that off.

WORKING THE POSSIBILITIES

I don’t feel like digging through their budget documents. I did a quick skim, and I saw exactly what they were being deceptive with – they just show how the deficits change… but don’t compare against the overall budget, whether revenues or expenditures.

So a $3.2 billion deficit is almost 9% of their revenues? So that tells me the new projected revenues are about $35.6 billion. And that the new projected expenditures are $38.8 billion. Those are the numbers for our figuring.

So there’s a few ways the projections could have been off:

- lower-than-projected revenues
- higher-than-projected expenditures
- both

CASE 1: LOWER-THAN-PROJECTED REVENUES

First case – the projected expenditures didn’t change, but the projected revenues did.

So the old projected revenues would have been $36.0 billion, compared against new projected revenues of $35.6 billion — gives a disparity of 1%.

Seriously, do the math for yourself: 35.6/36.0 – 1 = -1.1%

1%.

via GIPHY

Hyperventilation over a 1% difference in projected revenues, are you kidding me?

Getting within 1% sounds like an awesome projection to me.

CASE 2: HIGHER-THAN-PROJECTED EXPENSES

Projected expenditures changed, not the projected revenues.

So the old projected expenditures would have been $38.4 billion, and the current $38.8 billion makes for a difference of…

….do I have to tell you?

1% difference in projections.

via GIPHY

This is so dishonest… I can’t say I’m surprised.

Yes, let’s blame Rauner for projections being off by 1% for either revenue or expenses. I think he can absorb that blame. Hell, I would absorb that blame… if I can get financial projections within 1% tolerance, I’ll be doing awesome.

CASE 3: BOTH PROJECTIONS CHANGED

Now here is where it gets weird. You can have both projections be higher than before, and the deficit grows, and both be lower than before, and the deficit grows, etc.

So here’s where I actually have to look at the document and see what is being claimed.

This is what I’m given:

Y20 Revised General Funds Maintenance Deficit Projection November 2018 Economic and Fiscal Policy Report vs. Revised Estimates ($ in millions)

Report Deficit Projection (2,765)
Higher Education (70)
Human Services (275)
Public Safety (30)
State Employee Health Insurance (170)
Government Services (65)
Net Healthcare Adjustment 170
Revised Deficit Projection (3,205)

So…. I have no clue. Maybe Higher Education has a revenue component (and I really don’t care about the $170 million positive adjustment) — maybe it has to do with revenue allocations. I have no idea.

But let me say that case 1 and case 2 are the extremes if the issue is that both the revenues went down and the expenditures went up. Because you could be off 0.5% for each (in opposite directions), and you get that deficit growth.

HOW TO MANIPULATE NUMBERS

So how does one get from 1% deviations to a 16% change?

It’s because you’re not comparing the real stuff, that is, the items actually projected (revenues and expenses), but you’re comparing differences between those projected amounts.

I want to stay away from algebra (so as not to frighten anybody), so let me use some very “easy” numbers.

For deficits, one expects that expenditures will not too greatly exceed revenues.

To make this simple, let’s assume revenues are 1000.

Let’s say I want an 8% deficit, so that makes expenses 1080.

My difference is 80, an 8% deficit compared to revenues of 1000.

Let’s say I was off in my projection of revenues by 1% — so revenues were only 990. The deficit would now be 90, about 9% deficit. The increase from 80 to 90 is about 13% increase in that deficit.

Let’s say the revenues were fine, but expenses were off by 1%. The new expenses would be 1091, a deficit of 91… again, about a 9% deficit, and again, about a 13% increase.

Finally, let’s assume we were off both revenues and expenses by 0.5% — new revenues would be 995, expenses would be 1085, the deficit would be 90… and again, a 9% deficit (and a 13% increase).

The issue is comparing differences of numbers that are relatively close. A 1% increase or decrease in one of the numbers in the difference can lead to an-order-of-magnitude-larger change in the difference between the numbers.

GET READY FOR MORE NUMBER TRICKERY, ILLINOIS

This is mendacity (aka bullshit) to try to make the situation sound like something untoward was going on when the expense/revenue projections were off by about 1%….and to try to convince people that there is a CRISIS!

via GIPHY

(conveniently caused by the prior administration)

And we must RAISE TAXES NOW!

Or some such.

If this is Pritzker’s opener, I’m going to love to see his budget proposal later this month.

via GIPHY

Because they will use similar number tricks, I’m betting. Thanks for the warning!

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