Click Here For More Info) to COGFA members at the Commission’s meeting in Springfield on Wednesday, March 10. COGFA is the nonpartisan economic think tank of the Illinois General Assembly, and their Revenue Update for FY15 and numbers for FY16 will be key background data to be used by the General Assembly as they modify the State’s FY15 budget and craft a FY16 budget to meet the urgent fiscal needs of the State.
COGFA’s numbers confirm that the post-2009 Illinois “recovery” has been the slowest economic expansion of the post-World War II period. In each previous recession, not only were the rates of decline in economic output less severe, but the ensuing recoveries were faster and steeper. Illinois economic trend lines, starting in 2010, show steady but very shallow, palely upward-trending movements. New jobs are created in relatively low numbers and are being created, in Illinois, in sufficient numbers to force increases in median overall wage rates.
The pale post-2009 “recovery,” combined with the pushdown of State income tax rates in January 2015 are two forces that continue to combine to create a worsening State of Illinois budget crisis. A spreadsheet presented to staff by the Commission shows net income tax revenues dropping more than $4 billion in FY16, below what would have been paid to the State under the tax rates in effect in FY14. Growth rates in tax revenues attributable to underlying rates of growth in the Illinois private-sector economy are expected to make up only $500 million of the lost income, leading to a structural deficit of $3.5 billion in FY16. To this number is supplemented accumulated past-year deficits and unpaid State bills of many billions of additional dollars, plus the spending pressures created by many “entitlement” lines within the State’s budget.