COGFA releases grim revenue report
Friday, Feb 3, 2017 - Posted by Rich Miller
* More from the January COGFA report, with emphasis added by me…
Overall base revenues fell $167 million in January. As in prior months, continued weaker income taxes along with poor federal sources more than offset gains experienced by the other revenue sources, adding further concern to observations made in last month’s briefing. January did have one more receipting day than the same prior year period.
The poor year for gross corporate income taxes continued with monthly receipts falling $60 million, or $52 million net of refunds. Gross personal income tax receipts dropped by $57 million, or $70 million net of refunds and diversions to the Fund for Advancement of Education and Commitment to Human Services Fund. Other sources dropped $18 million in January, while public utility tax receipts fell $12 million for the month. Interest income dipped a modest $1 million.
While overall revenues declined, a number of sources managed to post gains. Sales taxes grew $49 million, which represents two consecutive months of good growth. Corporate franchise taxes unexpectedly surged, jumping $29 million. Insurance taxes rose $17 million, cigarette taxes by $5 million– making up for an earlier shortage, inheritance taxes grew by $4 million and vehicle use tax by $1 million.
Overall transfers fell $20 million in January. Lottery transfers dropped by $13 million, while other miscellaneous transfers dipped $7 million. Federal sources experienced another weaker month, this time falling $99 million below last year, reflecting reimbursable spending levels from the general funds.
Year To Date
Through January, base receipts are off $1.031 billion, or 5.9%. The past months performance did little in the way of alleviating concerns over FY 2017 revenues spelled out in last month’s briefing, particularly the disturbing observations made regarding the “Big Three”. While sales tax now has managed to post back to back months of decent performance, those gains were more than erased with continued drops in both personal and corporate income taxes.
To date, gross corporate income taxes are off $444 million, or $390 million net of refunds. Gross personal income tax is down $245 million or $332 million if refunds and diversions to the education and human service funds are included. As mentioned, sales taxes may have done better in Dec/Jan but have still only grown $94 million or 2.0%. Overall transfers are down $81 million and only the one-time nature of a SERS repayment has allowed all other sources to post a $66 million combined increase.
With continued dramatic falloffs month after month in federal sources, receipts are behind last year’s dismal pace by $388 million. Absent an infusion of resources that could be committed to reimbursable spending, the outlook for a meaningful recovery for federal sources is grim.
The problem with federal reimbursements is pretty obvious. The state can’t put up enough of its own cash to leverage all available federal dollars, so we’re literally leaving money on the table.
- Lefty Lefty - Friday, Feb 3, 17 @ 10:05 am:
Thanks Obama!
(couldn’t resist)
- Oh Boy - Friday, Feb 3, 17 @ 10:11 am:
Federal reimbursements that are lagging because bills are sitting in piles will eventually come home when those bills get pushed out.
That’s all a timing issue. So it might be a problem in the here and now, but it’s a problem that goes away eventually when there is a budget solution.
- Last Bull Moose - Friday, Feb 3, 17 @ 10:14 am:
Failure to qualify for Federal matching funds is ridiculous. This is gross mismanagement.
- wordslinger - Friday, Feb 3, 17 @ 10:17 am:
–The problem with federal reimbursements is pretty obvious. The state can’t put up enough of its own cash to leverage all available federal dollars, so we’re literally leaving money on the table.–
Not a very sound business practice.
- Anonymous - Friday, Feb 3, 17 @ 10:17 am:
Does BigBrain understand matching funds? Or is the TA more important?
- Rich Miller - Friday, Feb 3, 17 @ 10:21 am:
=== it’s a problem that goes away eventually when there is a budget solution. ===
Not all of that money will just sit there and wait.
- northshore cynic - Friday, Feb 3, 17 @ 10:21 am:
Will the last company leaving the State please turn out the lights??
- Anon221 - Friday, Feb 3, 17 @ 10:26 am:
In some programs, eventual Illinois budget deal or not, if Federal funds are not used or applied for in a timely manner, they can be lost permanently or the state may placed at the back of the line and has to start all over again. And, this also includes submitting timely reports as required under Federal matching programs that have that requirement as part of the money flow.
Either way, it’s gross mismanagement by the state (blame whomever you want to) to allow this to happen. New administrations, especially, should not put the brakes on things so long that losses like these occur.
- Tone - Friday, Feb 3, 17 @ 10:44 am:
The most concerning to me is personal income tax receipts are declining. People must be fleeing and job creators are afraid of our horrible taxes and regulations.
- Ratso Rizzo - Friday, Feb 3, 17 @ 10:52 am:
Just shows that for all his business acumen, Rauner has no idea how to run a state. I could do a better job.
- JS Mill - Friday, Feb 3, 17 @ 10:55 am:
Right now the state is in serious danger of failing to meet federal Maintenance of Effort requirements. They have not reimbursed districts for any FY 17 special education grant dollars. If they fail to do so they will lose something in the ballpark of $1 billion in federal matching funds.
- Anon - Friday, Feb 3, 17 @ 10:57 am:
===so we’re literally leaving money on the table.===
And we’re also being forced to pay millions and millions more in interest.
Glad we’ve got a brilliant businessman at the helm.
- Putz - Friday, Feb 3, 17 @ 11:04 am:
So why are DEMS wanting to continue EDGE? They’ve issued what I estimate to be four times the EDGE agreements in 2016 as they did on 2015. That puts us around 860 million that won’t go into our account. That’s just my back of the napkin. Who know how much we gave Amazon for those thousands of low pay jobs.
Why do DEMS want to continue that?
- Earnest - Friday, Feb 3, 17 @ 11:23 am:
>The state can’t put up enough of its own cash to leverage all available federal dollars, so we’re literally leaving money on the table.
This kind of thing drives me up the wall, just digging the hold deeper and deeper. The other thing is, the state is far from prepared for a reduction in federal dollars received if Medicaid becomes block grants or the Medicaid expansion from the ACA is ended.
- City Zen - Friday, Feb 3, 17 @ 12:27 pm:
==The most concerning to me is personal income tax receipts are declining.==
Yep. Less people making less money is a recipe for ongoing budget shortfalls. And how will our govt respond to a shrinking customer base? Offer the same service at a higher price, of course.
- Chicagonk - Friday, Feb 3, 17 @ 1:42 pm:
I worry we are heading towards a Detroit scenario. We obviously need a budget asap, but we also need reforms to encourage business development. Illinois has great universities (public and private). We have a great city in Chicago. A good indicator of new business development is PWC’s venture capital report and while Illinois improved significantly in this report in 2014 and 2015, we are still way behind states like Massachusetts, New York, and California. I’m not saying that we will surpass those states in VC funding anytime soon, but VC funding for businesses in NY and Massachusetts are both over $5 billion annually while Illinois finally crossed the $1B threshold in 2014.
- Putz - Friday, Feb 3, 17 @ 1:51 pm:
Chicagonk that’s what DCEO is supposed to be doing. But they were gutted to create Intersect Illinois which has only two full time employees now. All for naught.
You are right. We are headed towards Detroit.
- Anon221 - Friday, Feb 3, 17 @ 2:22 pm:
Chicagonk: “We obviously need a budget asap, but we also need reforms to encourage business development.”
How long does it take to establish a “status quo”? Is 2 years long enough? If so, then it seems that a full budget proposal from Rauner on Feb. 15 would be the “best, last, and final” reform he needs to be concentrating on right now. That is where he needs to “turnaround”.
- Last Bull Moose - Friday, Feb 3, 17 @ 4:32 pm:
The Detroit scenario is bogus.
Detroit had no ability to raise taxes enough to be solvent. Illinois simply refuses to act.
Not the same.