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SPRINGFIELD, Ill. – Illinois lawmakers are getting a better idea of the COVID-19 pandemic’s impact on revenue and what’s ahead as the economy recovers. The Commission on Government Forecasting and Accountability presented its revenue update and economic forecast for the current fiscal year Tuesday morning.
COGFA experts note the economy was quite strong before the pandemic started and it was able to snap back. Although, some states have recovered faster than others.
Revenue Manager Jim Muschinske says the Illinois economy should see some moderate gains with continued improvements from the historic lows seen during this pandemic. He hopes the economy will start to settle down and return to a “sense of normal” during the next forecasting period. However, Muschinske said the state has to face reality.
“Let’s not kid ourselves,” Muschinske stressed. “There is a lot of uncertainty that still resides out there. And until things are well in hand, it’s hard to be too optimistic obviously.”
He said a conservative view would probably benefit the state more than assuming revenue will pop back into place overnight. Meanwhile, the commission estimates Illinois will bring in roughly $40.4 billion in Fiscal Year 2022. That’s about $1 billion less than the Governor’s Office of Management and Budget projected last month. However, the administration hopes to save $932 million by closing what Gov. JB Pritzker calls tax loopholes. Republicans and business groups feel the tax incentives should stay in place.
FY22 Revenue Estimates
The $40.4 billion projection is actually a drop of over $1.1 billion from COGFA’s estimate for base revenues for FY21. Since people were allowed to pay taxes late last year, Muschinske explained that some are paying the state twice in the same fiscal year. That won’t be the case in Fiscal Year 2022.
“So, you’re talking about $1.3 billion or so in revenues that ’21 is able to benefit from that ’22 will not,” Muschinske added.
He also believes the net revenue from personal income tax will grow roughly 3%. The commission is comfortable with that projection since more employees will return to work as the economy recovers. Muschinske said that will allow more people to spend money across the state.
Officials are forecasting very little growth for corporate income taxes. Still, they expect a significant increase from sales tax. Muschinske said they’re projecting an increase of 2.8%.
“We’re going towards the upper level of the normal growth patterns for sales tax. We think there will be continued improvement by the consumer, especially as the stimulus works its way through the economy.”
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