Prairie State Wire

Illinois' revenue dropped by nearly half in April 2020 compared to April 2019, a drop of $2.7 billion.

The newly released report from the Commission on Government Forecasting and Accountability blames  the drop on a “combination of COVID-19 impacts, delayed tax filing deadlines, and comparative dropoff due to 2019’s April Surprise,” Wirepoints reported in a quick take.

Personal income tax receipts declined 48 percent, while corporate income taxes fell 57 percent, and sales taxes by 20 percent, a huge impact for the entire state.

But the state had a plan to offset some of that drastic loss.  According to Wirepoint’s Mark Glennon, the general fund borrowed $218 million from segregated special funds held by the Illinois treasurer.

The CGFA report notes that there were a few funding sources that actually posted monthly gains. For example, insurance taxes rose $29 million and estate taxes grew by $5 million. Public utility taxes rose $4 million as well.

Thanks to transfers from the refund fund and the capital projects fund, the state’s general funds are still up $404 million, according to the CGFA report. The state will have to repay those transfers though.

“Additional transfers and retransfers may occur  between funds as needed due to insufficient cash in the originator fund, as long as the amount outstanding is still at or below $1.2 billion.  Amounts shall be repaid from general funds to the original funds with interest within 48   months of the dates borrowed [originally 24 months],” the report notes. “With $218 million in borrowing occurring in April 2020 [$10.5 million of which was from another General Fund – Commitment to Human  Services  No. 0644)],  transfers to date to the General Revenue Fund equal $1.256 billion, while principal of approximately $288 million has been paid back.  Transfers to the Health Insurance Reserve Fund equal $231 million, with no pay backs to date.

As of April, if the organization excludes the inter-fund borrowing and proceeds that come from the treasurer’s investment program, the state’s massive drop-off of receipts gave the state a decline of $1.001 billion UNDER the April 2019 funding levels.

There are two months left in the fiscal year and personal income taxes are down by $91.3 million net, while gross corporate income taxes are down $273 million net. Gross sales taxes have had a $102 million net gain, but that is expected to turn negative soon, according to the report. Other revenue sources have declined by a combined $126 million as well.   

Looking ahead

The COGFA reports that consequences of the COVID-19 crisis – job losses, business impacts, and curtailed consumer activity -- will further affect the rest of the fiscal year  

The pandemic crisis caused the average unemployment rate for March to increase 0.3 percent over March 2019, to rise to 4.6 percent in March 2020.The organization is currently revising the financial and economic forecasts for the rest of the 2020 fiscal year, as well as recalibrating the revenue projection for the 2021 fiscal year.