Illinois Tax Revenue Declining Like We’re in a Recession, Slipped Again in December – WP Original
By: Mark Glennon*
The monthly report on state revenue was published today for December by COGFA (Illinois’ Commission on Government Forecasting and Accountability). It’s dismal again.
Overall base revenue slipped compared to last December by $257 million, continuing a trend. For this fiscal-year-to-date (which started 7/1/16) compared to last year, state revenue is off by about $1 billion.
“Perhaps most unsettling, says COGFA, “is that the last time the Big Three [personal income tax, corporate income tax and sales tax] experienced a combined decline during the first half of a fiscal year [absent tax rate changes] was during the recessionary years impacting FY 2009 and FY 2010.”
Sales taxes are the only component to eek out a gain. That revenue is “weak and managed to grow only $45 million.”
Part of the problem is a decline in transfers from the federal government. However, those transfers are largely a function of how much the state is collecting through its own taxes, which are needed to fund programs partially reimbursed by the Feds. As COGFA put it, the state’s “poor receipt performance has limited the ability to direct more resources to reimbursable spending and as a result, federal source receipts have also suffered.”
Summarizing, COGA says Illinois “experienced across the board revenue weakness. The most closely economically-tied major sources are experiencing levels of weakness not seen since the last recession.”
If it’s any consolation, state tax revenue is generally weak, though improving in most states. Twelve other states, however, did experience revenue declines in 2016, though they are mostly states dependent on the oil business.
*Mark Glennon is founder of Wirepoints. Opinions expressed are his own.