(R)eceipts for both March and April have been booked, and despite final payment deadlines for personal income tax being slightly delayed, revenues have been interpreted to continue to significantly outpace expectations. As a result, as discussed in the following revenue update, the Commission is making a revision for FY 2021, as revenues are expected to total $45.616 billion, or $2.025 billion above the March projection.
It is important to note that the majority of those upward revisions will be contained within the FY 2021 estimate and should not be assumed to repeat or be considered “baseable” for FY 2022 due to timing and historical receipt pattern disruptions brought about by the pandemic’s impact. That said, there is a measure of base growth that can be expected to be carried forward from the FY 2021 adjustment, particularly as it relates to continuation of underlying improvement of economic conditions as we distance ourselves from the worst of the pandemics impact. Therefore, the Commission’s revised revenue forecast for FY 2022 improves to $41.188 billion. The updated outlook reflects $792 million in total upward adjustments.
* Center Square has the biz react…
Some, like the Illinois Manufacturers Association, say that means the governor should drop his push to close or limit tax incentive programs to the tune of nearly $1 billion.
“In light of record revenue growth and billions of dollars in federal stimulus, there is no need to raise taxes on Illinois job creators that will only serve to constrain job growth and limit economic investment in the state,” said IMA’s Mark Denzler. “As we emerge from the pandemic, the Governor should be looking at ways to help the business community rather than harm them.”
Jack Lavin, with the Chicagoland Chamber of Commerce, is advocating the extension of the film tax credit that Pritzker is also advocating for. But, Lavin said if the governor cuts or limits other tax incentive programs on the chopping block, that will hurt the economy, especially during a pandemic.
“There’s only so much money that’s gonna come out of Washington D.C. to help us, what happens when that dries up?” Lavin told WMAY. “We have to have these kinds of tax credits that are helping invest in jobs, create jobs, jobs you can raise a family on.”
Josh Sharp, with the Illinois Fuel and Retail Association, said with the better-than-expected revenues reported, Pritzker should find revenue elsewhere.
Except that FY22 projected revenue increase does not appear to be enough to close the projected state deficit. Also, because of these rosier forecasts, Gov. Pritzker last week called for spending $350 million more on K-12 education.
*** UPDATE *** Slightly different, but still upward projections from GOMB…
The Governor’s Office of Management and Budget revised upward its General Funds revenue estimates by $1.469 billion for fiscal year 2021 and by $842 million for fiscal year 2022, compared to the estimates published with the Governor’s introduced budget in February 2021.
Strong year-to-date receipts in the state’s main revenue sources (individual and corporate income tax and sales tax) have led GOMB to revise its estimates. Through April, fiscal year 2021 General Funds revenues were outperforming revenue estimates from the February estimates by about 5 percent.
“While the increase in revenues is good news, and a sign our economy is coming out of the pandemic, much of these funds are one-time in nature and should not be expected to recur in FY2022,” said Deputy Governor Dan Hynes. “The administration was pleased to propose last week that we increase the state’s education budget for the coming year, using these funds and our proposal to end $1 billion in corporate welfare. However, the pandemic is still with us, and we have a lot of work ahead of us to ensure the state remains on sound fiscal footing, including repaying the federal government for loans used to cover current coronavirus expenses.”
Total General Funds state revenues for fiscal year 2021 are now estimated at $36.703 billion, compared to $35.311 billion in February, with total revenues, including federal sources, estimated at $44.949 billion. Total General Funds state revenues for fiscal year 2022 are now estimated at $35.283 billion, compared to $34.589 billion in February, with total revenues, including federal sources and the governor’s proposed closure of corporate tax loopholes, estimated at $42.552 billion.
The one-time sources of revenue include the double final income tax payments receipted in fiscal year 2021, and the tax receipt benefits from economic activity following individual stimulus payments and a full year of enhanced unemployment benefits throughout fiscal year 2021. Expanded unemployment benefits are currently only extended through September 2021, early in fiscal year 2022.
The resilience of the state’s economy and the continued impacts to the state from stimulus payments to taxpayers by the federal government and extended enhanced unemployment benefits led to the changed forecasts.
The revisions were published in GOMB’s April 2021 Report to the Legislative Budget Oversight Commission (LBOC) issued today. The full report is available here.