Editorial | Money, money everywhere in Springfield

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A combination of circumstances is creating a potentially worrisome situation in Springfield.

Ordinarily, Illinois taxpayers would be happy to hear that tax revenue is flowing into the state treasury at record levels, the state has virtually no bill backlog and that even $1.5 billion of interfund borrowing, done during the last state financial crisis, has been repaid to more than 100 special state funds.

But all that prosperity seems to be burning a collective hole in the pockets of lawmakers and Gov. J.B. Pritzker.

Indeed, these are heady times in Springfield. Earlier this week, the Legislature’s Commission on Government Forecasting and Accountability reported that three-quarters of the way though the current fiscal year, base general-fund revenue is up nearly $3 billion. That is an 11.6 percent increase in overall revenue — mostly from the individual and corporate income tax and the state sales tax — from a year ago at this time. The upturn may not be over; overall revenue in March was up 22 percent.

A strong state economy and “extraordinary” growth in tax revenue — the word used by the normally reserved folks at COGFA — is worth celebrating. But with any celebration, there needs to be the reminder that tough times — a recession, another epidemic — could be just around the corner.

A combination of factors has legislators and Pritzker suddenly discussing a variety of tax breaks, credits and refunds. Why? There’s all that money flowing to the treasury, the desire to move on from two years of COVID-19-related restrictions and economic strife, and an upcoming election where every statewide and legislative seat is on the ballot. A state tax refund a few weeks before surely would be noted in candidate campaign mailers and commercials.

But first, the state should focus on $1.8 billion owed to the federal government’s unemployment insurance trust fund. And legislators should agree to Pritzker’s plan to prepay $500 million of state pension debt, which will save taxpayers in the long run. Finally, they should adhere to the governor’s plan to replenish the state’s nonexistent rainy-day fund with at least $800 million.

After that, if legislators have avoided a spending spree in the closing days of the spring session, some modest, fiscally responsible tax breaks for low-income Illinoisans, such as an expanded earned income tax credit, may be in order.

The Legislature is set to adjourn Friday. Until then, Illinoisans will watch, worried and skeptical, to see if lawmakers will follow past practice and spend too much money and promise too much in tax breaks from a suddenly robust state economy. This is a great time to not follow past practice.

via The News-Gazette

April 6, 2022 at 10:05AM

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