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A House revenue committee on Thursday heard projections of an Illinois economy that is steadily moving back toward a level of pre-pandemic normalcy, which means revenue spikes realized due to temporary changes in consumer spending habits and federal stimulus packages are expected to subside. […]
Specifically, revenues for the fiscal year ending on June 30 are expected to be about $4.6 billion greater than were projected when the governor signed the budget into law last year, according to a presentation by the Commission on Government Forecasting and Accountability.
COGFA expects state coffers will have taken in $48.5 billion by the end of the fiscal year, up from a $44.4 billion projection in the budget that lawmakers approved in May. The base state revenue sources actually grew by $4.6 billion, however, because the governor’s office amended its planned use of federal funds to offset General Revenue Fund spending downward by $500 million due to the surplus.
The updated FY 22 estimates include a $1.6 billion increase in personal income tax from initial expected levels, a $1.2 billion increase in corporate income tax, and a $926 million increase in sales tax revenue.
*** UPDATE 1 *** Jordan Abudayyeh…
This adjustment reflects CoGFA’s updated revenue forecast, but it is ‘only’ $695M higher than what was in the GOMB’s revised revenue forecast at the beginning of February, so this shouldn’t be a surprise to anyone who reviewed the November 2021 Economic & Fiscal Policy report or the Fiscal Year 2023 Budget Book. This additional revenue is what the Governor is proposing be directed to paying off delayed bills accruing unnecessary interest costs, investing in pensions, building up the Budget Stabilization Fund and covering one-time tax relief.
* Mike Miletich…
House Majority Leader Greg Harris (D-Chicago) explained Thursday that appropriations committees are talking with each state agency to discuss requests in the budget. Both chambers are also closely watching sudden shifts in the state’s revenue projections, for the good and the bad.
Gov. JB Pritzker’s proposed tax relief plan included in the budget relief on the unprecedented revenue. However, Harris said members must be careful with using that money.
“We’re gonna still continue to look at the more conservative side of the numbers because we know that things can go south pretty fast if there’s another variant or something else comes up,” Harris said. “And we want to be sure we plan for those contingencies.” […]
Another area in the budget is funding for mental health services. Members of both parties have acknowledged the toll this pandemic has taken on mental health, from those living in isolation to children struggling to keep up in school. Harris noted that suicides are up 200% since the start of the pandemic and cases of people dying from overdose have gone up 33% during that same time. Although, the waitlist for mental health care continues to grow.
“There’s 4,000 vacant positions in community health centers and substance abuse treatment centers across the state,” Harris said. “One of the things people are really supportive of in the governor’s introduced budget is this new major investment of $130 million into the workforce and into mental health treatment and substance abuse treatment. It can eliminate the waitlist, fully staff community-based service agencies, and begin to provide rapid trauma-informed care to people when they are in crisis.”
* Majority Leader Harris was also asked about the huge deficit in the state’s unemployment insurance trust fund and what’s happening now…
There is a bipartisan, multi-industry working group that’s made up of Democrats and Republicans from both chambers, the governor’s office IDES, but also the representatives of business and labor who are meeting regularly, they have been for a couple of weeks. Looking at defining the scope of the problem, what are the available potential solutions and coming back with a recommendation. So they’re continuing to meet. And obviously, the potential use of ARPA, like many other states have done, is certainly on their plate.
* The Motor Fuel Tax break was also a topic yesterday…
One concern Kevin Artl with the American Council of Engineering Companies of Illinois raised deals with the governor’s proposed freeze of the annual gas tax increase set for July 1. Artl said that could lead to funding gaps of half a billion dollars over five years.
“Our first preference is to keep that in place and make sure that we can keep the commitment of Rebuild Illinois [the state’s multi-year infrastructure plan passed in 2019] on to repair and modernize infrastructure, but we’re also realists and willing to work with all parties to find something that could work,” Artl said.
One idea Artl said is to adjust the sales tax that’s on top of the gas tax to provide relief for taxpayers.
*** UPDATE 2 *** Uh-oh. Yvette Shields at the Bond Buyer…
The Illinois Sports Facilities Authority projects a nearly $30 million shortfall in hotel tax revenues needed to repay a state advance for debt service on Soldier Field bonds, and Chicago will have to cover the gap absent other mitigation actions.
The authority has grappled with shortfalls over the last two years as hotel taxes — the primary source of bond repayment — plummeted amid the COVID-19 pandemic.
Over the last two years, the authority dipped into its own reserves and pushed off debt service through a $19 million scoop-and-toss restructuring in order to spare Chicago from having to cover the gap.
The authority’s willingness and ability to do it again is in question. The use of reserves contributed to a downgrade and some board members last year worried about the added burden of restructuring, so it remains unclear whether ISFA will find a way to cover the latest gap that again spares the city.
* Related…
* New state legislative session will focus on budget, Peters and Hunter say
posted by Rich Miller
Friday, Feb 25, 22 @ 11:12 am
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Maybe they could catch up on the SURS retiree dental insurance. Delta dental told me they are waiting for the state to pay them, they are unable to pay dentists until the state pays them. Delta said the backlog is increasing and is approaching 500 days.
Comment by DuPage Friday, Feb 25, 22 @ 11:28 am
It’s time for CMS to buy something shiny.
Comment by Glengarry Friday, Feb 25, 22 @ 11:34 am
Too bad JB’s amendment didn’t raise our taxes….
Comment by 44 Friday, Feb 25, 22 @ 11:42 am
Requests to spend this money will be coming out of the woodwork.
IMO no spending that involves future annual spending should be entertained.
What am I thinking. This is Illinois.
Comment by Sir Reel Friday, Feb 25, 22 @ 11:43 am
=== Too bad JB’s amendment didn’t raise our taxes….===
You must be in the 3%… they were only ones seeing a raise.
To the post,
The spending of monies, in any way, is a weight and measure to policy beliefs and policy plans.
That’s how budgets and spending work, it will be interesting going forward what all this will spell in those monies.
Comment by Oswego Willy Friday, Feb 25, 22 @ 11:45 am
Breaking: Sources say that there will be no payment on any debt. The administration will soon make the following statement:
Due to our great financial windfall, we will create new programs, that while very expensive, will help many Illinoisans. We will spend today and worry about tomorrow tomorrow.
Comment by Grandson of Man Friday, Feb 25, 22 @ 11:51 am
== === Too bad JB’s amendment didn’t raise our taxes….===
You must be in the 3%… they were only ones seeing a raise. ==
There was also a small property tax rebate, component to this, I believe. Also, as someone who works in public sector budgeting, this whole debate is really between temporary/cash and permanent/recurring revenues. Alot of the current revenue influx especially in the sales tax is due to adjusted spending habits that may or may not continue. The personal income tax is both the largest and the most consistent form of revenue to the state.
Comment by DarkDante Friday, Feb 25, 22 @ 11:58 am
==Breaking: Sources say that there will be no payment on any debt. ==
Other than the proposed $900M for rainy day funds in FY22/3 and the additional $500M in pension funds in FY23?
Comment by DarkDante Friday, Feb 25, 22 @ 12:00 pm
– $4.6 billion greater than were projected –
See what happens when you actually sell the Thompson Center
Comment by Michelle Flaherty Friday, Feb 25, 22 @ 12:05 pm
If not adjusted for inflation caused by policies based on feels, 48.5B = 44.9B. Or, rather, an increase of 500M, not 4.6B. Doesn’t matter where the taxes were raised - they were raised and that always filters onto the shoulders of you-know-who. Also, again, does federal bailout money grow on trees?
Comment by MERV 20 Friday, Feb 25, 22 @ 12:09 pm
Be careful with the surplus, state expenses will be going up with the sanctions.
Comment by Norseman Friday, Feb 25, 22 @ 12:27 pm
> Be careful with the surplus, state expenses will be going up with the sanctions.
Natural gas already spiked, should only get worse now. I wouldn’t mind a 1-year rebate program.
Comment by supplied_demand Friday, Feb 25, 22 @ 1:49 pm
=Maybe they could catch up on the SURS retiree dental insurance. Delta dental told me they are waiting for the state to pay them, they are unable to pay dentists until the state pays them. Delta said the backlog is increasing and is approaching 500 days._
SERS is in the same boat. While they are at it, the $1500 limit doesn’t due more than a cleaning and cavity filling annually. Just had a crown for one tooth. Close to $3K out of pocket.
Comment by bogey golfer Friday, Feb 25, 22 @ 1:52 pm
Ah - great news and all without JB’s tax the rich change to our flat tax
Comment by Sue Friday, Feb 25, 22 @ 1:53 pm
==without JB’s tax the rich change==
Glad so many of you are defending those poor rich people.
Comment by Demoralized Friday, Feb 25, 22 @ 3:01 pm