Ultimate magazine theme for WordPress.

Editorial staff | Strong economy boosts government spending plan | editorial

Illinois tax revenues have increased dramatically. But questions about the fiscal future of the state abound.

Whatever the reason, whoever gets the loan, Illinois got good news on the front line of the state budget last week.

A growing economy has resulted in a sharp surge in tax revenues – mostly sales and income taxes – which reduce the budget deficit burden of Illinois for 2021-2022.

It’s not time to dance in the street. Illinois remains in dire financial straits. Nonetheless, the $ 1.7 billion increase in forecast sales is to be welcomed.

The state intends to use the proceeds to pay more than $ 900 million in arrears bills and add $ 300 million to the state’s depleted rainy day fund.

Governor JB Pritzker said the remaining additional revenue would increase his projected budget surplus from $ 88 million to $ 406 million.

That’s a questionable claim given the multitude of budget tricks available to masters of the complicated budget process. But sales increases are always welcome.

Despite the positive impact on the current state budget, Illinois faces budget deficits going forward. Pritzker’s Office of Management and Budget forecasts deficits of more than 400 million

These numbers, which represent a lot of fiscal misery, explain why the governor is constantly looking for new revenue. With the election year  -proaching, it’s hard to imagine that Pritzker will ask lawmakers to raise state income tax by 4.95 percent.

But if he’s re-elected, Pritzker will almost certainly be asking lawmakers for a massive increase, likely from 4.95 to about 7 percent. If he did that, Pritzker wouldn’t be the first governor to do this.

Of course, the future is not set in stone. The economy could continue to grow and increase sales as in the current fiscal year.

Or the Illinois economy and that of the nation could fall back to what they were at the height of the coronavirus-inspired economic lockdowns that devastated people and businesses.

There is also the issue of rising prices, especially for energy and food. The news was filled with reports of last week’s price inflation – up 6 percent year over year – that could be devastating for all concerned.

Given these uncertainties, it’s hard to put too much emphasis on long-term forecasting and better focus on the here and now and the future.

The good business news in Illinois – and elsewhere – was fueled by massive federal spending that Congress  -proved in response to the coronavirus slowdown.

Congress distributed billions of dollars in stimulus checks to individuals as well as local and state governments. The question now is what impact it will have if these funds are no longer available.

Perh -s this is why the state budget bureau is hesitant to announce that continued strong growth is far from certain until life in Illinois returns to pre-pandemic standards.

“Although the economy overall recovered to pre-pandemic levels, the labor market recovered inconsistently, with only a few periods of significant employment growth. A full recovery is uncertain until the end of the pandemic, “it said.

Comments are closed.

%d bloggers like this: