Editorial | State revenues, backed by federal money, pour in | Editorials
Although not doing as well as its neighbors, Illinois’ economy is relatively strong.
Illinois’ long-term financial situation remains as ugly as it is clear – debts and deficits as far as the eye can see.
Nonetheless, Illinois’ revenue picture remains strong, at least for now. It’s thanks to the massive injections of federal money resulting from the coronavirus pandemic.
The July report from the Illinois Commission on Government Forecasting and Accountability referred to the “spectacular revenue year” for fiscal year 2022 (July 1, 2021 through June 30, 2022). At the same time, he said fiscal year 2023 (July 1, 2022 to June 30, 2023) is off to a good start, again thanks to federal money.
The COGFA report says the new fiscal year began “on a high note, with July general fund revenue increasing $395 million for the month.”
“The reimbursement of $584 million in federal COVID-19 relief funds was the driver of this overall increase,” the report said.
“The inclusion of one-time revenues in fiscal year 2023 will provide an influx of revenue that was not assumed in the enacted budget for fiscal year 2023 – perhaps serving as a safety net as the state navigates through the next 11 months of this exercise.”
The future – that’s the catch. What does the rest of the year hold for Illinoisans and the nation? If the country has slipped into a recession – two consecutive quarters of negative growth – that’s strange, because unemployment is quite low and there are plenty of jobs available.
At the same time, price inflation is a real threat to the wallets of low- and middle-income people, as it wipes out income gains. In effect, price inflation leaves people running in place or falling behind in the race to keep their hearths and homes.
An example is gasoline at $5 a gallon. It devastated people’s budgets, forcing them to choose which bills to pay. The subsequent drop in demand — ordinary people just couldn’t afford it — drove the price down to between $3.50 and $4 a gallon — but that still presents an affordability issue.
However, this is a problem for individuals. It’s a different story for the state government, which relies on revenue to maintain services.
COGFA reports that the “big three” sources of revenue — state income taxes, corporate income taxes and sales taxes — “started the year with solid gains.”
Given Illinois’ overall financial situation, the earnings report provides about the best possible news for the immediate future. The tide can turn quickly, but for now, Illinois’ financial seas are relatively calm.