PI Original Adam Doster Tuesday November 11th, 2008, 1:36pm

Revenues Low, Need For Stimulus High

Angela highlighted it in the Early Bird, but it's worth emphasizing how little tax revenue the state is actually collecting. Since July, each of Illinois' key revenue generators -- the individual income tax, corporate income tax, and sales tax -- have come in far below ...

Angela highlighted it in the Early Bird, but it's worth emphasizing how little tax revenue the state is actually collecting. Since July, each of Illinois’ key revenue generators --  the individual income tax, corporate income tax, and sales tax -- have come in far below government estimates. David Ormsby has the grim details.

- IL Individual Income Tax Individual income tax was originally projected to grow 1.1 percent, but receipts are down 4 percent compared to projections. If this continues for the remaining eight months, Individual Income Tax receipts would be about $330 million below the estimates.

- IL Corporate Income Tax Corporate Income Tax was originally projected to grow 4.1 percent, but receipts are down 14 percent. If this continues for the remaining eight months, Corporate Tax receipts will be about $270 million below the estimates.

- IL Sales Tax Originally projected to grow at 1.6 percent, receipts are down 3 percent. If this pattern continues for the remaining eight months, Sales Tax receipts will be about $215 million below the estimates.

Last month, Gov. Blagojevich signed the $221 million funds sweep passed by the General Assembly in September, but he's yet to approve the supplemental spending bill which authorizes the individual agencies to appropriate the money.*  Blagojevich spokeswoman Katie Ridgway told the State Journal-Register that her boss "agrees that there are some core services in the supplemental [budget measure], which is why it is still under review."

Facing the impending shortfall, it would be easy (and short-sighted) for the governor to hold back these funds much longer.  He has until December 6 to move on the bill.

Yet even the sweeps won't do enough to plug the potential $800 million gap, as Blagojevich is well aware. That's why these new tax projections underscore the need for a broad and substantial federal stimulus package.

Illinois is not alone in this regard.  Ormsby points to an Economy.com item that shows 32 states -- California, New York, Florida and Ohio among them -- experiencing comprable mid-year shortfalls. Without assistance, governors are going to take an axe to crucial programs, including expenditures on public health, education, and state employment. Such cuts would then deepen the recessionary pressures weighing on working people.

State leaders should absolutley scour the budget for inefficiencies, but $800 million won't emerge out of thin air. It's going to come from where it hurts.

*CLARIFICATION: This post originally suggested that Blagojevich is yet to sign the fund sweeps bill.  In fact, he approved the bill in early October, but is yet to sign the accompanying spending measure.

Taxonomy upgrade extras: 

Comments

Log in or register to post comments