Not Good: Illinois Tax Revenue Declining – WP Original
By: Mark Glennon*
This is very bad news indeed. COGFA, the Commission on Government Forecasting and Illinois, just released its Illinois state revenue report for October and the fiscal year to date (which began July 1). Tax revenue continues to drop, despite the supposed economic recovery.
Comparing this October to last October, overall base revenues fell $304 million. Receipts from the individual income tax, corporate income tax and sales tax all declined, although transfers the state gets from the Federal government also contributed to the drop.
Comparing this fiscal year-to-date to the same period last year, base receipts are down $449 million, “reflecting growing concern with revenue performance for the first part of FY 2017,” COGFA said. Individual and corporate income tax revenue are down and sales tax revenue is flat for the year.
It’s important to note that this revenue drop is no longer attributable to expiration of Illinois’ temporary income tax. It expired at the end of 2014.
This is a particularly ugly story when combined with the analysis released today by the Illinois Policy Institute of IRS data on out-migration of the individual tax base. It shows more out-migration than in-migration of taxpayers and of total adjusted gross income, which is basically the individual tax base. And it’s the wealthier folks who are leaving while lower income folks are moving in. That’s based on 2014 data, the most recent available, and it has probably worsened since then.
The bottom line is ever increasing expenses, especially for pensions (another $1 billion increase coming up), while revenue and the tax base shrink. The state is already running deep in the red ($6 to $10 billion per year, depending on whose numbers you use), despite the harsh spending cuts already in place.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.