State sales tax collection jumps 11 percent

SPRINGFIELD — Illinois sales tax collections soared by more than 11 percent in August, likely fueled by a surge in automobile sales.

The revenue report is good news for a state government that was forecasting flat sales tax growth for the fiscal year that began July 1. In just two months of the new fiscal year, sales tax receipts have grown $108 million, or more than 8 percent, above last year's level.

"It's a little surprising," said Jim Muschinske, revenue manager for the state's Commission on Government Forecasting and Accountability. "Certainly we're above where we thought we would be. The caution is, however, that there's still a lot of time for that to change.

"Don't read too much into this. It's hard to get too giddy over that measure when, on the other hand, who have employment problems wreaking havoc on Illinois' economy."

The latest Illinois unemployment figures showed the statewide jobless rate was 9.2 percent in August, up from 9.1 percent in August 2013 and 9 percent in August 2012.

"I think we've got six months of actually less people working than the same month a year earlier," Muschinske said.

He said he assumed the August sales tax gains were related to "good auto sales. And I don't know if that trend can continue. It appears the automakers have made a pretty good year-end model push."

The Wall Street Journal reported Friday that U.S. consumers bought 1.5 million cars last month, up 17 percent from a year earlier.

General Motors' sales jumped 15 percent, Ford's were up 12 percent and Chrysler's gained 11 percent.

Foreign automakers also reported strong sales, with Honda gaining 27 percent, Toyota 23 percent and Nissan 22 percent.

David Parkhill, owner of Sullivan-Parkhill Automotive in Champaign, called August "a strong new car and used car month for us" that ranked in the top three so far this year.

"I think it's a combination of good incentives out there, the economy is getting a little stronger as far as people being willing to purchase vehicles, and the weather was favorable," he said. "We had a strong August last year and I'd say this August surpassed it by a little bit."

Jim Turner, president of O'Brien Auto Park in Urbana, said August "was the best Toyota month we've had in probably five years and the best Volkswagen month we've ever had."

Other nameplates did almost as well, he said.

"Those are the highlights, but overall it was the best mnoth of the year, that's for sure," Turner said.

He attributed the increased sales to "more stability locally than there has been in a few years, historically low interest rates and a high demand for people's trade-ins. The used car market is very good so used-car values are strong, which makes it easier to buy a new one."

"It looks good for auto sales," Muschinske said. "But what we really need to start seeing are some increases in some durable goods and new home sales."

Another part of the reason for the big gain in state sales tax revenues from August to August, Muschinske noted, was that August sales in 2012 were weak, down 3 percent from August 2011.

But after reporting feeble sales tax revenue for the first part of this calendar year — actually down for three of the first four months of 2013 — Illinois sales taxes have gained every month of the last four, ranging from $33 million higher in June to $65 million more in August.

"We're seeing some pretty decent sales tax numbers," Muschinske said, "but you also have to consider the fact that the personal income tax is plodding along (up just 2.1 percent in August) and the corporate income tax, usually not a big contributor earlier in the fiscal year, is down somewhat (off nearly 6 percent in August)."

Overall revenue growth so far this fiscal year, aside from a $400 million intergovernmental transfer into the state general revenue fund, is $47 million, he said.

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