Despite a weakened economy, Illinois’ tax revenues are growing.
Illinois has so many problems — its shaky finances top the list — that it’s important to recognize and cheer any good news that comes our way.
It helps people to maintain their equilibrium and provides a basis for hoping that better times may be in the offing.
In that context, it’s pleasing to report that state tax revenues have increased more than $900 million over the first six months of the current fiscal year (2021-2022) than during the same period the fiscal year before (2020-21).
Analysts at the legislature’s Commission of Governing Forecasting Accountability contend “this growth is even more impressive when factoring in the remarkable performance of income tax receipts this fiscal year.”
That revenue category is up for the first six months of the year by $266 million. At the same time, net sales-tax revenue exceeds last year’s number by $643 million.
Less impressive was the small $40 million total increase in other revenue categories, including cigarette taxes, motor-fuel taxes, utility taxes and insurance taxes and fees.
The income and sale tax categories count as good news because they reflect improvement in important ingredients of a sound economy — people working, people paying taxes and people spending.
COGFA’s December report also contained interesting numbers in a category — employment — that reflects the overall economy.
Illinois has a population of roughly 12.5 million people.
Prior to the coronavirus pandemic, Illinois averaged 6.1 million jobs statewide. After Gov. J.B. Pritzker put the clamps on people’s activities as part of his coronvirus public-health measures, the number of people working in April 2020 fell to 5.3 million.
That’s a devastating decline, one that threatened to knock the stuffing out of Pritzker’s budget planning. No wonder he and other elected officials went hat in hand to Washington, D.C., to beg for the bailout that Congress subsequently approved.
Circumstances still are not where they need to be, but the number of people working in Illinois was up to 5.9 million in November. Judging from the number of help-wanted signs on display, there are plenty of job opportunities for individuals who would like to be part of the work force.
There is some irony when it comes to the issues of unemployment and income taxes in Illinois.
As more and more people were forced out of their jobs during the pandemic, unemployment claims skyrocketed.
COGFA reports that in 2019, Illinois averaged nearly 42,000 unemployment insurance claims per month. But in March 2020, “this figure shot up to 413,212 claims and reached as high as 519,269 claims in April 2020.”
Readers may recall that dilemma was exacerbated by the state officials’ inability to handle the demand. It was the worst of two worlds — people losing their jobs and the state failing to help them with their loss of income.
Readers should remember that the next time they hear someone say, “Let the government do it.”
Unemployment claims numbers have declined through most of 2021. But the state reports that despite the failure of employment levels to return to pre-pandemic levels “income tax receipts have continued to come in at surprisingly steady levels.”
“A contributing factor as to why income tax revenues have continued to perform well can be attributed to the taxation of unemployment benefits via withholding taxes,” COGFA reports.
In June 2020, the state took in more than $160 million by withholding state income taxes from unemployment compensation payments. That’s four times the monthly average of $40 million.
Illinois, of course, is a long way from restoring itself to good financial health. Indeed, given the state’s profligate spending practices, that day may never come.
But in the midst of all those dark clouds, there are intermittent rays of sunshine that deserve recognition.
