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As bad as the Illinois economy appears now, there are no guarantees that it will turn around quickly, says a recent report by the University of Illinois’ Institute of Government and Public Affairs.

“While many economists feel that the economy is at or near the worst that it will get, there is a strong divergence of opinion regarding how long the recession will last and the speed of the recovery,” said Kenneth Kriz, a professor of public administration at the University of Illinois at Springfield and the co-author of the UI report.

It noted that while some analysts, including the Congressional Budget Office, have forecast a “V-shaped” recovery (a 40 percent annualized Gross Domestic Product decline in the second quarter followed by 23.5 percent growth in the third quarter), others see an L-shaped comeback — rapid decline with a very slow return to growth.

Still others described what they called a “Nike swoosh,” with a more gradual return to growth.

“Even if public health conditions allow some businesses to be brought online, they will not be able to succeed unless upstream suppliers can provide business inputs and downstream customers feel comfortable with engaging in economic activity,” said the report.

That is a particular problem in the leisure and hospitality sector, which has been hit with an almost 40 percent unemployment rate.

“Many restaurant owners have estimated that their ability to cover costs might be challenged if occupancy levels are reduced as a result of social-distancing rules,” the authors wrote. “This will limit the ability of restaurants to rehire the pre-pandemic levels of staff, further delaying the economy’s recovery.

“Also, for those who have lost jobs or have seen a reduction in income from reduced hours, it is likely that their demand for restaurant meals, visits to athletic events and other entertainment might be curtailed for both financial reasons and concerns about infection.”

The report forecasts the equivalent of more than 550,000 jobs lost in Illinois by next March.

That translates to the loss of $28.5 billion in income to Illinois citizens and businesses, along with $76 billion in economic output. In 2018, Illinois’ gross state product was an estimated $857 billion.

That diminished economic activity translates into reduced tax revenue for state and local government.

In April, for example, state revenue was down 44 percent from a year earlier, with a nearly 20 percent decline in sales tax collections and a 48.5 percent drop in individual income taxes (affected mainly by this year’s postponed date for income tax payments).

Local governments are also bracing for difficult times.

In Champaign, city officials also are forecasting losses in sales and income taxes — from $38 million in sales tax revenue in fiscal year 2019 to an estimated $36 million in FY 2021 and from $8.3 million in income taxes in FY19 to $7.7 million next year.

Because of the uncertainty, the city administration is recommending the city council adopt a budget in June but revisit it before Nov. 1 with updated data.

There’s uncertainty in Urbana as well, said Mayor Diane Marlin, where the city council will be taking up the proposed budget June 8, a few weeks later than normal.

“We were ready to go except that then the pandemic rolled in,” she said. “We went from having the best financial forecast we’ve had in seven or eight years after digging ourselves out of our $2.5 million budget deficit and reaching all the financial goals we had set three years ago, and then March happened.

“And now we’re looking at about a $3 million shortfall. And that’s the best-case scenario.”

So far, she noted, none of the federal aid programs have sent direct financial help to cities like Urbana.

“We eliminated the equivalent of about 10 full-time positions through voluntary separations and reductions,” Marlin said. “So what we are doing in the short term is we’re not filling vacancies except through individual review of each position.”

And, she added, “we do have a fund balance, and it’s a pretty healthy fund balance. We have enough to carry us through and the budget will be balanced. So we’ll see where we stand in September.”

“We’re not laying anybody off right now and we’re maintaining services, but the big question is going forward,” she said. “What if the (University of Illinois) students don’t come back in the fall? Or what if we have another wave of pandemic?

“Until we get herd immunity and a vaccine, this is not going away. Even though we’re reopening, the virus is still here.”

Tom Kacich’s column appears Sundays in The News-Gazette. He can be reached at kacich@news-


Tom Kacich is a columnist and the author of Tom's Mailbag at The News-Gazette. His column appears Sundays. His email is, and you can follow him on Twitter (@tkacich).