State's revenue growth to be short-lived
SPRINGFIELD — Despite a sputtering economy including an average unemployment rate of about 9 percent, the state of Illinois reported strong revenue growth for the fiscal year that ended June 30.
But don't expect it to continue into this year.
Combined state and federal revenue into the state treasury in the last fiscal year was up by $2.26 billion, or about 6.7 percent greater than fiscal year 2012, according to the state Commission on Government Forecasting and Accountability.
Total state and federal revenue for the fiscal year was about $36 billion, exceeding COGFA estimates made in March 2012 ($33.7 billion) and in May 2013 ($35.7 billion).
The March 2012 estimate was used as the revenue framework for the state budget for the year ending June 30.
"As shown, that admittedly conservative forecast was easily exceeded by actual revenue performance, as receipts exceeded the amounts spelled out in the (House Joint Resolution 68) by $2.345 billion," said COGFA. "Most of the additional revenue came from the larger economically related sources, as well as federal sources which reflected available resources for reimbursable spending."
The biggest increase was in corporate income tax revenues, which because of changes in federal tax law, reported a one-time 23 percent increase. Personal income tax collections were up 7.8 percent, and sales tax revenue grew by $129 million, or 1.8 percent. There also was a $472 million increase in federal revenue.
But the outlook for the fiscal year that began July 1 is less optimistic.
In May, COGFA estimated that fiscal year 2014 revenue would be $35.44 billion, a decrease of $270 million from COGFA's estimated FY 2013 revenue.
The reason, the commission said, is that the "April surprise" revenue surge of 2013 would not be repeated next year.
"That's in large part the reason," said Jim Muschinske, revenue manager for COGFA. "There are some other areas, too. Federal sources are estimated to be a little lower."
COGFA again used "a pretty conservative forecast" for fiscal year 2014, he said.
"What we're saying is that we're just assuming the forecast for '14 stands, and it probably should be viewed as an even more conservative forecast," Muschinkske said. "That increase in '13 just allows the (state) comptroller to pay a little bit more of the backlog."
In fact, Comptroller Judy Baar Topinka said earlier this week that the revenue surge this spring allowed the state to end the fiscal year $6.1 billion in the red, compared with $7.5 billion down on June 30, 2012.
But she predicted Illinois' bill backlog would grow again to approximately $7.5 billion by August.
"Make no mistake, the 'April surprise' is history," Topinka said. "That windfall allowed us to aggressively pay down bills and provide some relief to vendors, but it did nothing to address the state's systemic budget problems."
The backlog could grow to as much as $9 billion by November or December, she said.