SPRINGFIELD — The state of Illinois received some unexpected good news Tuesday when officials reported that revenues received in April came in $1.5 billion higher than expected.
That news was delivered in a letter to legislative leaders and top-ranking members of the House and Senate appropriations committees from Department of Revenue Director David Harris and Alexis Sturm, Director of the Governor’s Office of Management and Budget.
“As an immediate result of the strong April performance, coupled with revenue collections year-to-date, the State of Illinois will be able to address most of the $1.6 billion shortfall in the enacted (Fiscal Year 2019) budget because of the April revenues alone,” Harris and Sturm stated.
The main reasons for the boost in April were higher-than-expected receipts in both personal and corporate income taxes.
Much of that, however, may be a one-time occurrence that resulted from strong stock market performance and recent changes in federal tax law. Because individuals can no longer deduct taxes they pay to state and local government on their federal returns, many filers did not adjust their state tax withholdings and ended up owing money in April. Harris and Sturm said many other states also saw higher tax collections in April.
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But they also said there were other factors at work, including strong job growth, that will continue into the next fiscal year, which begins July 1.
As a result, the Department of Revenue raised its official estimate of next year’s tax collections by $800 million, bringing the new estimate to $22 billion.
Harris and Sturm said Gov. J.B. Pritzker is recommending that money be earmarked for making the state’s required payments into state pension systems. In his budget proposal in February, Pritzker originally suggested reducing those payments and stretching out the time for paying off the unfunded pension liabilities by another seven years.
“With the additional revenues due to the forecast revision, the state will be able to meet the current funding commitment to the retirement systems without extending the ramp this year,” Harris and Sturm stated. “The governor remains committed to finding ways to fund our pension commitments in a sustainable manner.”
State Comptroller Susana Mendoza, however, noted in a separate statement that the state still faces a backlog of unpaid bills totaling more than $6 billion, and she has urged lawmakers to be cautious about expectations for continued revenue growth.
“While we cannot confirm or deny the Department of Revenue’s projection of $800 million more than expected for Fiscal Year 2020 at this time, we are hopeful and will continue to research this possibility thoroughly,” Mendoza said. “My office has prioritized pension payments and debt service since I took office and that will be our policy going forward.”