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* 2:34 pm - It’s still early in the fiscal year, and things like this can even themselves out over time (I’ve seen it before), and $200 million isn’t that gigantic in the big budget picture, but this is from an Illinois Dept. of Revenue press release…
National Economy Weighs Heavily on Illinois Revenue Collections
Year to Date Calculations equate to $200 million shortfall for Fiscal Year 2009
SPRINGFIELD – As a poor national economy weighs heavily on state revenues across the country, Illinois is experiencing a triple threat of lower-than-projected revenue for the first two months of the fiscal year. Sluggish income tax collections, along with weak sales tax on an annual basis, would result in as much as $200 million short of the state’s already conservative projections.
The Illinois Department of Revenue (IDOR) reports that revenue from individual income tax is growing at a rate just over 1.2 percent, which is below OMB’s projected 3.3 percent growth anticipated in the FY09 budget. Income tax makes up the largest portion of Illinois’ revenue, and thus has the most influence on a balanced budget. A high statewide unemployment rate at 7.3 percent and stagnant wages suggest this trend could only get worse.
Sales tax revenue for the same period of FY09 was .5 percentage points below the level projected for the FY09 budget, the result of a decline in consumer spending due to rising unemployment, declining home equity, and stagnant wages. IDOR suggests that the ongoing financial market crisis will likely exacerbate already weak credit conditions, meaning further constraining consumer spending. Higher food prices mean people will spend less on other goods.
Finally, the corporate income tax makes the department wary. Since about 10 percent of the corporate income tax comes from the financial services sector, IDOR is concerned that September’s volatile stock market will further hurt FY09 revenue.
For other revenue sources, IDOR also noted that revenue from the real estate transfer tax, cigarette tax, and motor fuel tax is down.
* 2:39 pm - More from the SJ-R, which was apparently slipped the numbers in advance…
Gov. Rod Blagojevich said the budget lawmakers sent him this summer was more than $2 billion out of whack, and he cut $1.4 billion of that out in deep slashing that lawmakers are now trying to reverse. This revenue shortfall could only exacerbate the problem.
Revenue spokesman Mike Klemens said it’s iffy to make projections about the full budget year this early, but the department is basing its estimates on the most stable sources of revenue.
“Just watch out,” he cautions about the rest of the year.
The agency expects the situation could get worse, with motor fuel and real estate transfer tax money also down, financial markets struggling and consumer facing growing spending pressures.
Interestingly enough, the House and Senate are working on crafting a supplemental approp bill and a funds transfer proposal while the Dept. of Revenue makes an unusual early pronouncement of gloom.
posted by Rich Miller
Tuesday, Sep 23, 08 @ 2:36 pm
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“Unusual early pronouncement of gloom”….coincidence I’m sure…
Comment by Anonymous Tuesday, Sep 23, 08 @ 2:47 pm
I suspect that Mr. Klemens has been told by the Governor’s office to go forth and paint a picture of gloom and doom so the Governor has cover to veto the supplemental.
Comment by Just the Facts Tuesday, Sep 23, 08 @ 3:03 pm
Note to the the drunken sailors in Springfield –
the grog ration has to be cut.
Note to all — no mention that casino gaming revenues are down, partly due to Nosmo King, who is not permitted in public places..
Comment by Truthful James Tuesday, Sep 23, 08 @ 3:04 pm
I propose we allow — not require — smoking in casinos and bars. I’ll be happy to contribute to the cause.
Comment by wordslinger Tuesday, Sep 23, 08 @ 3:27 pm
INDICATORS
Unemployment
Rate (Average)
JULY 2008—— JUNE 2008——JULY 2007
7.3%———– 6.8%———–5.1%
Annual Rate
of Inflation (Chicago)
JULY 2008—— JUNE 2008——JULY 2007
9.5%————4.5%———–5.8%
Compared to FY 2008; transfers were down $63 million. Riverboat transfers dropped $45 million (-60%), lottery $12 million (-25.5%).
How far off their target projections will they be for the “10th Casino License”?
Did I just hear the revenue estimate; or the actual bid for the “Lottery Lease” drop like a to of bricks?
Even desperate unemployed people gamble far less these days since the enactment of “welfare reform” limiting the benefit period.
Looks like they have rolled SNAKE EYES
Comment by Cash and Carry Tuesday, Sep 23, 08 @ 3:39 pm
Don’t worry, I’m sure Hank Paulson will be around soon to come to the rescue. Welfare: it’s not just for poor folks anymore!
Comment by 47th Ward Tuesday, Sep 23, 08 @ 3:45 pm
And if Americn taxpayers via their fearless reps in
the US Congress can be snookered into approving
a no strings attached $700 billion bailout of the
financial services industry, our local legislators
probably figure we’ll be an easy mark if they run out of money. Supplements to the budget are expressions of legislative confidence that many things never change, including Illinois’ taxpayers
overwhelming generosity.
Comment by Cassandra Tuesday, Sep 23, 08 @ 4:06 pm
Whoa…revenue short fall… Kind of makes this budget stuff a moot point…Eh?
Comment by Siyotanka Tuesday, Sep 23, 08 @ 4:09 pm
Friend of mine told me this p.m. that they still have money to pass around down in S’field. No shortfall yet.
Comment by Truthful James Tuesday, Sep 23, 08 @ 4:12 pm
Before we get out the sponges to soak up the crocodile tears, the defecit is in relation to what was expected, not in comparison to last years collections.
Boo hoo they are on track to get 1.4 billion instead of 1.6 billion of new dollars.
Comment by Plutocrat03 Tuesday, Sep 23, 08 @ 6:03 pm
Plutocrat03
{Before we get out the sponges to soak up the crocodile tears, the defecit is in relation to what was expected, not in comparison to last years collections.}
Compared to FY 2008; transfers were down $63 million. Riverboat transfers dropped $45 million (-60%), lottery $12 million (-25.5%).
Comment by Cash and Carry Tuesday, Sep 23, 08 @ 6:33 pm
I’m a non smoker and actually prefer patronizing restaurants, casinos and bars since the smoking ban was enacted but I have to say that I have witnessed a big drop off in customers since the ban. Clearly, the smoking ban has hurt busniess and, frankly, it is kind of sad seeing all the smokers standing outside of these establishments enjoying a smoke.
Can’t we reach a compromise to allow smoking in establishments who can demonstrate an ability to filter the air adequately and seqregate the smokers? I am sure the technology in filtering systems has progressed to a point where this is possible. Maybe bringing these patrons back would help businesses and thus the lack of tax revenue?
It seems like something worth considering given the poor economic times. Just my humble opinion from a non-smoker.
Comment by stones Wednesday, Sep 24, 08 @ 9:31 am