* Hannah Meisel at the Daily Line…
Illinois’ general funds revenue was off by $1.135 billion at the end of FY 2020 as compared with FY 2019, according to the Commission on Government Forecasting and Accountability’s monthly report published last week. The total drop was close to what COGFA and the Governor’s Office of Management and Budget had predicted for the state when Illinois’ revenue estimates were adjusted due to the state’s screeching halt in economic activity due to Covid-19, but slightly exceeded expectations. Moving Illinois’ deadline for income taxes from the traditional April 15 to July 15 to match the federal tax delay accounted for some but not all of the $765 million net drop-off in personal income tax revenue for FY 2020. Gross corporate income taxes dropped $308 million net, sales taxes were off by $154 million net from last year’s levels, according to COGFA. In the next six months, Illinois will borrow up to $5 billion from the Federal Reserve to make up for lost revenues through a first-of-its-kind program set up by the Fed this spring and borrowing authorized by the General Assembly in the budget approved during the legislature’s four-day special session in May.
* June wasn’t as horrible as some might’ve though, according to COGFA…
Only a few revenue sources experienced increases for the month. As indicated above, gross personal income taxes fared well, rising $173 million, or $150 million net. Again, it is assumed that some final payments [which usually would have fallen in April] have instead been spread over May/June and will extend into July to coincide with the revised deadline. Public utility taxes increased $12 million in June, while other sources grew $12 million and inheritance tax receipts $7 million.
Despite the overall monthly gain, most revenue sources suffered declines in the last month of the fiscal year. Gross sales taxes fell $83 million, or $74 million net. Gross corporate income taxes were down $48 million, or $33 million net. Insurance taxes continued a very volatile pattern of receipting by dropping $44 million. Cigarette taxes were down $19 million for the month, corporate franchise taxes were off $10 million, and interest income dipped $3 million.
Overall transfers grew $26 million for June. Other miscellaneous transfers posted a $60 million gain, but was partially offset by a $9 million decline in lottery transfers and $25 million loss in riverboat transfers [as casino and video gaming was temporarily halted until July 1st]. As mentioned earlier, federal sources had a strong month, rising $184 million. That gain was made possible due to proceeds from June’s short-term borrowing being directed to reimbursable Medicaid spending.
* FY 20 year end…
The “Big Three” revenue sources felt the brunt of COVID-19. For the fiscal year, gross personal income taxes fell $947 million, or $765 million net. Gross corporate income taxes dropped $430 million, or $308 million net, while gross sales taxes were off $206 million, or $154 million net from last year’s levels. In total, the combined net drop of the “Big Three” was $1.227 billion.
Most of the other revenue sources experienced a down year as well, with all other revenue sources dropping a net $255 million.
Aided by gains associated to Refund Fund and Capital Projects Fund transfers, overall transfers to the general funds managed to grow $396 million. That gain was significantly muted by COVID’s impact on the lottery as well as riverboat gaming activities. Federal sources, despite ending the year with a flourish, experienced wide monthly swings in performance this fiscal year and finished down $49 million.
Benjamin Varner, a senior analyst and economic specialist for COGFA, said the Illinois and national economies have shown signs of improvement, but the danger is not over.
“Although the improving economy may have seen a trough and begun to expand again, it does not mean that the economy is in a good place or could not tumble further,” he said. “The economy remains well below its peak. It will need continued strong growth to return to previous levels.”
That outlook was seconded by Comptroller Susana Mendoza in a recent interview with Capitol News Illinois. She told the news service that managing the current state budget may be even more challenging than dealing with the budget impasse because the state must now deal with the effects of less revenue.
Illinois lawmakers approved a budget for the current fiscal year that avoided steep cuts to state programs. Instead, it relies on the state borrowing up to $5 billon from the Federal Reserve in order to keep state government operating. It is relying on further assistance from the federal government to ensure the budget is balanced.
* Record reefer revenue for state coffers in June - State collects almost $12M from taxes for recreational cannabis, topping total for April