State financial overseers hope that diminishing revenue numbers for December are not a harbinger of things to come.
The cautionary report prepared by the Legislature’s Commission on Financial Forecasting and Accountability follows five consecutive months of unexpectedly high revenues to the state.
“After months of robust levels of growth ... two of the major state sources, personal income-tax and sales-tax receipts, experienced a notable slowdown in December,” COGFA revenue manager Eric Noggle reports.
He said income-tax revenue increased a “meager $13 million” while “sales-tax gross receipts fell for the first time this fiscal year” by $13 million.
“While this weaker performance is noteworthy, it will take a couple more months of data to see whether this is the start of a significant downtrend in these receipts, or if the slowdown is simply due to a timing element related to the reporting of receipts over the last month,” Noggle said.
While income- and sales-tax receipts were disappointing, analysts reported that corporate income-tax receipts remain strong. They increased by $223 million over December 2021.
The report’s numbers are based on fiscal years. The current 2022-’23 fiscal year started July 1.
December’s disappointing numbers are a far cry from a strong November.
In November 2022, income-tax revenues were up by $228 million, corporate income taxes increased by $85 million and sale taxes jumped $134 million, as compared with November 2021.
News of the December report will no doubt be received with concern by Gov. J.B. Pritzker. He’s on record as relying on continued strong revenue gains to finance the ambitious spending plans he disclosed Monday when sworn in to his second term.
Other smaller tax sources were similarly disappointing.
The commission reports that inheritance taxes were down by $17 million, public utility taxes by $12 million and cigarette taxes by $6 million.
While state revenues were disappointing, federal money continues, at least for now, to pour in. The report stated “these gains helped offset the overall decline in revenues from state sources for the month.”
At the same time the commission reported on current revenues, it also painted a picture of the state’s economy and what makes it go.
Citing 2021 gross-domestic-product numbers, the commission reported that the state’s GDP was $947.7 billion, “the fifth-largest economy in the U.S. behind California, Texas, New York and Florida.”
It said the state’s economy has grown by 3.7 percent per year since 1997, “well below” national growth of 4.3 percent per year.
Illinois’ largest industrial sector — “Finance, Insurance, Real Estate, Rental and Leasing” — totaled $213 billion, or 22.5 percent of total GDP.
The second largest is “Professional and Business Services,” while the third is the manufacturing base, which declined sharply over the past 25 years.
In 1997, manufacturing represented 17 percent of the state’s GDP; by 2021, it had fallen to 12 percent. That reflects huge losses in available jobs.
In 1997, Illinois manufacturing provided over 900,000 jobs. By 2021, that number fell to 554,000.
COGFA economist Benjamin Varner said the “overall trend of economic activity from goods to services can be seen” in the GDP numbers.
While Illinois is one of the largest agricultural states, many will be surprised to learn that “Agriculture, Forestry, Fishing and Hunting” is now and has been minuscule — just 1.1 percent in 2021 compared with 0.9 percent in 1997.
Jim Dey, a member of The News-Gazette staff, can be reached at email@example.com or 217-393-8251.