While not doing as well as its neighbors, Illinois’ economy is relatively strong.
Illinois’ long-range financial picture remains as ugly as it is clear — debts and deficits as far as the eye can see.
Nonetheless, Illinois’ revenue picture remains strong — at least for the time being. That’s thanks to the massive infusions of federal money stemming from the coronavirus pandemic.
The July report from the Illinois Commission on Government Forecasting and Accountability referenced “the spectacular year of revenues” for the 2022 Fiscal Year (July 1, 2021, to June 30, 2022). At the same time, it stated the 2023 Fiscal Year (July 1, 2022, to June 30, 2023) is off to a great start, again on the strength of federal money.
The COGFA report said the new fiscal year started “on a positive note, as July general funds revenues were up $395 million for the month.”
“The reimbursement of $584 million in federal COVID-19 relief funds was the driver of this overall increase,” the report states.
“The inclusion of the one-time revenues in FY 2023 will provide an influx of revenues that were not assumed in the adopted FY 2023 budget — perhaps serving as a safety net as the state navigates through the next 11 months of this fiscal year.”
The future — there’s the rub. What does the rest of the year have in store for the people of Illinois and the nation? If the country has slipped into a recession — two consecutive quarters of negative growth — it’s a strange one, as unemployment is quite low and there are plenty of jobs available.
At the same time, price inflation is a real threat to the pocketbooks of low- and middle-income earners because it wipes out gains in earnings. In effect, price inflation leaves people running in place or falling behind in the race to maintain hearth and home.
One example is $5-a-gallon gasoline. That devastated people’s budgets, forcing them to choose which bills to pay. The subsequent decline in demand — ordinary people just couldn’t afford it — has dropped the price to between $3.50 and $4 a gallon — but that still represents an affordability issue.
That, however, is a problem for individuals. It’s a different story for state government, which relies on revenue to maintain services.
COGFA reports that the “big three” of revenue sources — state income taxes, corporate income taxes and sales taxes — “started off the year with solid gains.”
Given Illinois’ overall financial picture, the revenue report provides about as good a news as it can get for the immediate future. The tide can turn in a hurry, but for now, Illinois’ financial seas are relatively calm.