State finances get two pieces of good news – Crain’s Chicago Business

In its assessment released today of Gov. J.B. Pritzker’s proposed $49.6 billion operating budget, the Civic Federation praised “smart” moves to inject an additional $138 million into the state’s rainy day fund and to make $200 million in supplemental pension payments.

And the proposed Fiscal 2024 budget projects a $165 million surplus next year.

The federation expressed concern that non-pension spending is proposed to rise 8.3% over last year’s budget. However, that increase is smaller — 1.2% — when supplemental appropriations are added to the proposed budget. 

And the watchdog strongly cautioned against moves to sweeten pension benefits for Chicago firefighters in a pair of pending bills, with one measure dealing with pensions likely to cost the city $350 million in coming decades.

Also today, bond-watcher Fitch took a look at Illinois and other early-reporting states that saw their revenues plummet in tax-filing April, compared to April 2022.

“Illinois’ legislative fiscal office reported a sharp $1.844 billion decline in April general fund revenue, 23% lower than the prior year, with personal income taxes (PIT) falling $1.5 billion (-32%),” Fitch reported. “Similarly, Pennsylvania’s April PIT receipts declined 30% (year over year,) but growth in other taxes, including corporate income and sales taxes, limited the overall revenue drop to 13%. Total April general fund revenue in Georgia dropped 16.5% from last year, led by a 32% (year over year) fall in individual income taxes.”

However, it added, “Despite April tax revenue declines, all three states are on track to comfortably exceed their adopted budget revenue forecasts, which anticipated tax revenue declines for the full fiscal year. Illinois had budgeted a 7.4% drop in tax revenue but has seen a smaller 1.0% (year over year) decline in year-to-date tax revenue through April.”

Illinois’ April dip also may have been impacted by a new provision in the law intended to give pass-through entities such as partnerships protection from a change in federal law that capped the personal deduction for state and local taxes, generally known as SALT, at $10,000 a year, the agency said.

The Illinois provision is “intended to be revenue-neutral for states, but the complicated mix of payments, credits and refunds can take multiple years, resulting in unpredictable revenue volatility in any single year,” Fitch said.

The report did not get into spending. That’s currently a hot subject in Springfield, as lawmakers race to fill a $1 billion hole in funds for health insurance for undocumented immigrants and handle other needs before adjourning their spring session next week.

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via rk2’s favorite articles on Inoreader

May 11, 2023 at 03:13PM

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