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* Keep in mind when reading this Commission on Government Forecasting and Accountability report for July that federal ARPA funds were used for one-time things, like debt reduction, etc. So, the overall “decline” isn’t really doing anything to ongoing state spending programs. Instead, pay most attention to recurring base revenues…
Base revenues into the State’s General Funds performed quite well to start off FY 2024 with year- over-year growth of $396 million. However, when last July’s $584 million deposit of ARPA reimbursements are included in the calculation, the overall change is a decline of $188 million to start the fiscal year. July had the same number of receipting days as the same month the prior fiscal year. The increase in base receipts was spurred by notable improvement from income tax receipts. Personal Income Taxes rose $184 million in July, a net increase of $153 million when removing distributions to the Refund Fund and the Local Government Distributive Fund (LGDF). Similarly, Corporate Income Taxes rose a solid $117 million, or $95 million on a net basis.
As provided by P.A. 103-0008, the annual percentage of personal income tax revenues that are to go to the Income Tax Refund Fund was lowered from 9.25% in FY 2023 to 9.15% in FY 2024. The percentage of corporate income tax revenues that are to go to the Income Tax Refund Fund was also reduced, from 14.5% to 14.0%. Reduced refund fund percentages mean that more available funds could go into the State’s General Funds. However, the gain in net receipts due to these percentage changes will be more than offset by an increase in the portion distributed to the LGDF. Public Act 103-0008 also provided that 6.47% (instead of 6.16%) of personal income tax revenues (net of refunds) shall go to the LGDF in FY 2024. The amount of net corporate receipts to the LGDF did not change and remains at 6.85%.
The growth in base revenues was also aided by a significant rise in Federal Sources base receipts. In July these particular receipts were $253 million higher than the year prior. However, if the $584 million in non-base federal dollars receipted in July 2022 from the ARPA Reimbursement for Essential Government Services are included into the equation, Federal Sources were actually down $331 million for the month. No additional ARPA reimbursements are anticipated in FY 2024, which will be a comparable disadvantage throughout the year when comparing FY 2024 with FY 2023 year- to-date totals.
Sales Taxes held flat in July on a gross basis. On a net basis, when accounting for distributions to the Road Fund and other transportation funds, a modest decline of $11 million occurred due the increase in Road Fund Transfers under current law. In regard to all Other State Sources, revenues combined to eke out a $2 million gain. A $20 million increase in Interest on State Funds & Investments, a $7 million rise in Corporate Franchise Taxes, and a slight $1 million increase in Public Utility Taxes helped offset declines in General Funds receipt distributions from Insurance Taxes [-$16 million]; Inheritance Taxes [-$6 million]; and the Cigarette Tax [-$4 million].
The performance of Transfers In was mixed. Lottery Transfers were $20 million higher, Gaming Transfers from Illinois’ casinos were up $7 million, and Cannabis Transfers rose $1 million. These gains, however, could not overcome the $124 million decline in Other Transfers, resulting in an overall Transfers In decline of $96 million. The notable decline in Other Transfers is primarily due to a Capital Projects Fund July 2022 transfer of $140 million that did not repeat in July of this year.
* To recap, this is a year-over-year July-only growth of $396 million, including net gains of $153 million in personal income taxes (10.9 percent increase) and $95 million in corporate income (57.9 percent increase).
Also setting aside one-time ARPA money for one-time spending, the state saw a $253 million base increase in federal funding, which is a 414.8 percent increase.
The sales tax net decline was due to the yearslong task of eventually transferring all sales taxes on motor fuels to the Road Fund.
Excluding ARPA, total net General Funds sources grew from $3.01 billion in July of 2022 to $3.406 billion in July of 2023. That’s a 13.2 percent increase.
* With inflation, $3.01 billion in July of 2022 is equal to $3.1 billion in June of 2023. July numbers aren’t yet available, but inflation has significantly cooled of late. So, factoring inflation, that’s still $306 million in growth and represents a 9.87 percent increase. It’ll be slightly smaller when July numbers arrive.
posted by Rich Miller
Wednesday, Aug 2, 23 @ 1:02 pm
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Related: The University of Illinois Flash Index increased in July, from 103.0 to 103.2. The Flash Index is based on growth in income tax, corporate tax, and sales tax revenues.
https://igpa.uillinois.edu/july-u-of-i-flash-index-increased-marginally/
Comment by DuPage Dad Wednesday, Aug 2, 23 @ 3:29 pm
Another fantastic revenue month receives a gigantic collective yawn. lol
Comment by Rich Miller Wednesday, Aug 2, 23 @ 3:35 pm
Not much to say other than that it’s good news!
Comment by Nick Wednesday, Aug 2, 23 @ 3:40 pm
The thing is, for me, the silence is on the spelunkers, can’t say too much, and blocking and tackling (and good to the economy), sometimes that ain’t as fun to opine?
:)
Comment by Oswego Willy Wednesday, Aug 2, 23 @ 3:43 pm
To me, this is the stuff of government. Not who uses what bathroom. Not second guessing librarians.
Must be too dull (or dense) for the crazies.
Comment by Sir Reel Wednesday, Aug 2, 23 @ 3:56 pm
Well in July the election year suspension of 1% tax on groceries sunsetted and the gas tax went up again so why is this unexpected?
Comment by Lucky Pierre Wednesday, Aug 2, 23 @ 5:20 pm
LP, you cannot possibly be that stupid.
The grocery tax is collected on behalf of local governments, not the state.
The Motor Fuel tax is not a General Funds source.
And if you are that stupid, please leave now.
Comment by Rich Miller Wednesday, Aug 2, 23 @ 5:22 pm
Lucky - You might look into a Florida based blog, Ken Griffin is likely hiring household help…
Comment by Lincoln Lad Wednesday, Aug 2, 23 @ 5:56 pm
=LP, you cannot possibly be that stupid.=
LOL, the evidence is overwhelmingly affirmnative.
Comment by JS Mill Wednesday, Aug 2, 23 @ 8:49 pm