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Tuesday, Sep 27, 2011 - Posted by Rich Miller

* For the second day in a row, the Tribune has hyped a gloom and doom budget story…

[Comptroller Judy Baar Topinka] said Illinois is pulling in less than expected from this year’s 67 percent increase in the income-tax rate, which makes her office’s job of paying the state’s bills that much harder.

I haven’t seen that phenomenon showing up in the Commission on Governmental Forecasting and Accountability’s monthly reports at all. So I called COGFA and asked what was going on.

“Based on our estimates, that’s not what we’re seeing,” said COGFA executive director Dan Long.

Long’s assertion was backed up by his revenue manager, Jim Muschinske, who said he looked at the latest numbers today, “and there was nothing that was eyebrow-raising at all.”

In fact, Muschinske said, as of today, “gross personal is up 73 percent, corporate 76 percent, and sales 13.7 percent. It’s hard to sound alarmist with those numbers.”

“I’m not really seeing what they’re seeing at this stage of the year,” Muschinske added. He was all the more puzzled because COGFA gets its daily revenue numbers from the comptroller’s office.

* It turns out, Topinka is using a different revenue projection than COGFA…

Topinka said the increased tax revenues were projected to raise [$500 million a month], but that Illinois’ high unemployment rate left the state $60 million short of that estimate.

Net of refunds, which is the number that Topinka’s office told me it’s using, COGFA is projecting an average $400 million monthly revenue growth from the personal and corporate income taxes. That’s way different than Topinka’s $500 million estimate. Even without refunds (the “gross” numbers used above by Muschinske), COGFA’s projection for this fiscal year is an average of $441 million a month. Last month, Illinois brought in $490 million before refunds and $456 million after refunds. By COGFA’s estimates, we’re ahead of the game both ways.

* This, however, is probably spot on…

Comptroller Judy Baar Topinka on Monday said she fears what will happen in Illinois should the nation slip back into recession, warning the state’s finances are so bad there’s nothing to fall back on.

The veteran Republican statewide politician said she’s “very, very nervous” about recent economic signs that include growing unemployment, an erratic stock market and weak housing sales. State government already is trying to get out from under billions of dollars of debt accumulated in recent years, she said.

“Illinois just could not handle it, and we’d have serious consequences,” Topinka said while addressing the City Club of Chicago. “Unfortunately, I think we’re holding our breath right now.”

I don’t disagree at all.

* And I also don’t disagree with this statement by Rep. David Harris, a House Republican who today defended the state budget against criticism by the Civic Federation…

Harris said he acknowledges the state is in financial trouble. But, he argued, the budget adopted by lawmakers this year plans to spend less than the state is predicted to take in.

“I don’t think they gave the legislature enough credit for doing what we did with the budget,” Harris said. […]

But Harris says this year was an important budget step.

“When you’re in a hole, stop digging,” Harris said. “And this year we stopped digging.”

12 Comments

- too obvious - Tuesday, Sep 27, 11 @ 11:51 am:
“Comptroller Judy Baar Topinka] said Illinois is pulling in less than expected from this year’s 67 percent increase in the income-tax rate, which makes her office’s job of paying the state’s bills that much harder.”

I’m sure the pay raises to her staff will help the state’s budget situation a lot.

- JBilla - Tuesday, Sep 27, 11 @ 12:01 pm:
Yea, when I heard about the $440 million extra a month as a negative because it was $60 Million below the Comptroller Office estimate, I really had to think hard about why $440 Million more a month is a bad thing. That sounds like the tax is definitely working, at least short term. I’d rather be plus $440 Mil than not.

- wordslinger - Tuesday, Sep 27, 11 @ 12:28 pm:
–“Illinois just could not handle it, and we’d have serious consequences,” Topinka said while addressing the City Club of Chicago. “Unfortunately, I think we’re holding our breath right now.”–

Boo, and I might add, hoo. It takes real leadership to inform us all that we’re in a tight spot.

No kidding? Didn’t know that. Why did I get out of bed and go to work today, it’s all so hopeless?

Now, what do you propose to do about it?

We are blessed in these interesting times with a political class that sees nothing more than a path to re-election by stoking fears and endlessly moaning that the house is on fire, while refusing to put their backs to any sort of compromise remedies to put out the flames.

By the way, Illinois and the country will “handle” anything that comes down the way. We’re all made of a little sterner stuff than our leaders.

- Soccertease - Tuesday, Sep 27, 11 @ 1:10 pm:
Comparing income tax receipts ‘gross’ and ‘net of refunds’ can be misleading. Hardly any refunds are paid in August. Refunds paid in Feb-Apr last fiscal year averaged $285 million per month compared to about $42 million per month Jul-Sep.

- Rich Miller - Tuesday, Sep 27, 11 @ 1:38 pm:
===can be misleading.==

No, because the state is supposed to set aside those refund receipts.

- Rich Miller - Tuesday, Sep 27, 11 @ 1:41 pm:
===Refunds paid in Feb-Apr last fiscal year averaged $285 million per month===

And overall receipts were higher then, too.

- Rich Miller - Tuesday, Sep 27, 11 @ 1:41 pm:
Also, keep in mind that the state is expecting fewer refunds next April because employers did not immediately adjust payroll withholding to account for the tax increase.

- walkinfool - Tuesday, Sep 27, 11 @ 2:28 pm:
Maybe Harris should educate Senator Murphy, who keeps saying the opposite.

- Shemp - Tuesday, Sep 27, 11 @ 2:33 pm:
Unfortunately, I don’t think it’s needless, even if there is a hint of hype. Frankly, outside of those who really care and follow closely, I don’t think most residents know how truly bad this is nor understand the negative trajectory we face given pension and debt liabilities. I’m all for bad news until people really start to understand that tough choices have to be made and people need to be made accountable to make those hard choices.

- Rich Miller - Tuesday, Sep 27, 11 @ 2:35 pm:
===I’m all for bad news until people really start to understand===

Here’s the problem, Shemp. This is not “bad news.” It’s “false news.” Basically, you’re arguing for a deceitful media propaganda campaign.

- Soccertease - Tuesday, Sep 27, 11 @ 2:36 pm:
Rich, all I was saying is that the Comptroller’s figures subtracts refunds paid from income tax receipts - COGFA doesn’t. Since refunds are mainly paid in Feb-Apr, the numbers should be annualized to be comparable. Average monthly refunds for fiscal year 2011 is about $178 million.

- Rich Miller - Tuesday, Sep 27, 11 @ 2:37 pm:
===COGFA doesn’t.===

Yes, it does.

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