A shrinking population and workforce is also cutting into Illinois' income tax receipts, according to reports.
While the state budget crisis is over, Illinois still has its work cut out for it in bringing in enough money to pay for everything, addressing issues like people moving out of state to get away from high taxes and unemployment.
The Commission on Government Forecasting and Accountability (CGFA) analyzed the 2017 budget deficit, which is projected to grow by $6.2 billion this year, and found that the state is receiving less money from taxes and dealing with an increase in unemployment. The CGFA predicts the 2018 budget deficit to grow to $7.6 billion, not including the $15 billion the state currently owes.
Jim Muschinske, revenue manager for CGFA, said in a recent House Revenue and Finance Committee hearing that a state tax receipt survey showed Illinois’ number of individual income tax receipts has been slowing for the last several years.
“While Illinois – certainly, we are probably doing worse than the vast majority of states – we are not alone in terms of a slowdown that states are seeing in terms of receipts,” Muschinske told the Prairie State Wire.
However, in addition to reduced tax revenue, wages have continued to drop and unemployment has fluctuated, according to Muschinske.
“If there is going to be any growth, certainly we are not going to see it from the actual number of people working, but perhaps we’ll start seeing some wage pressures starting to pick up in the next years,” Muschinske said.
Illinois’ unemployment rate sits at 4.6 percent while the national rate is 4.3 percent. Even though unemployment is down from last year’s 5.7 percent, Muschinske says it’s mostly due to shrinkage in the state’s population and labor force.
“The state’s demographics present it with another challenge, as an aging population coupled with a trend toward fewer workers hampers job and income gains, which are forecast to be below average over the extended forecast horizon,” Muschinske said in a report summary.