PI Original Adam Doster Thursday June 18th, 2009, 10:51am

Illinois Income Tax Receipts Down 10.7% In 2009

April is a key month for state tax collectors. On the 15th,
individual income tax returns are due. Most states' fiscal year also
ends around that time, meaning an unexpected tax receipt shortfall
leaves lawmakers little choice but to trim the budget -- or find new
revenue...

April is a key month for state tax collectors. On the 15th, individual income tax returns are due. Most states' fiscal year also ends around that time, meaning an unexpected tax receipt shortfall leaves lawmakers little choice but to trim the budget -- or find new revenue -- in the middle of the following year. According to new data from the New York-based Nelson A. Rockefeller Institute of Government, legislators in Illinois and other states might have to do just that.

Released today, the Rockfeller Institute's report (PDF) "April Is the Cruelest Month" shows deep declines in overall personal income tax revenues in nearly every reporting state. That includes Illinois, where total personal income tax collections from January to April of this year fell 10.7 percent as compared to the same period in 2008. In Illinois, personal income tax accounts for 35.4 percent of all taxes the state collects, right at the national average.  Other states are in worse shape as the source of revenue shrinks.  New York, for instance, relies on the personal income tax for almost 56 percent of its tax revenue. The data again shows how the global recession is digging into Americans' wallets and "consequently, state coffers."

It's also a good reminder that the budget cuts currently being pushed by some in Illinois won't make the state's fiscal problems disappear. Next year, revenues could rebound slightly, but so will demand for state services. Then, the following year, the infusion of stimulus dollars will run out.  Cutting state services to the bone now, which puts state's most vulnerable at an enormous risk, does not mean that we won't need to further repair the budget in 2010.

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