October 14th, 2020
ITEF Comment Vol. XI Issue 4
Springfield Spenders Squander State Revenue Increase And Put State In Red
Last year at this time, the fiscal “news” from the State had an ominous ring, even as total state revenue for Fiscal Year 2004 had risen $5.2 billion or 10.5% over FY2003, according to the Illinois Comptroller’s website and reported by the Illinois Taxpayer Education Foundation (ITEF). Illinois House Speaker Michael Madigan (D-22, Chicago) confirmed ITEF’s figures during the dog-and-pony show he called the “Speaker’s 2005 Bipartisan SUMMIT on State Finances and the Budget for the State of Illinois” in February of this year.
This year, in contrast, the Associated Press (AP) released a story headlined in the July 8 Chicago Sun-Times, “Illinois tax revenue beats expectations,” trumpeting “soaring” tax revenue and a “remarkable economic turnaround.” The basis for this story was a rather small hike in the FY2005 General Revenue Fund of $719 million (including at least a part of $765 million in “short-term borrowing”) or 2.8% over FY2004. (For some reason, the state always chooses to limit its release of revenue figures to the General Revenue Fund, which represents just 1/4 to 1/3 of the state’s total tax revenue.)
According to ITEF’s examination of the revenue records of the Comptroller’s office, total tax revenue for the State of Illinois in FY2005 (the twelve months ending June 30, 2005), managed to climb 1% or $550 million, from $54.8 billion in FY2004 to $55.3 billion. FY2004 was such a boom year that, compared to FY2003, FY2005 state revenue was up an astonishing 11.8% – twice the two-year inflation rate of 5.8% – or about $5.8 billion from FY2003. This includes a $1.8 billion increase in state income-tax revenue over the past two years and a $1 billion hike in sales taxes. Compared to many taxpayers, the state is swimming in cash.
Despite this revenue increase, the state government is facing $2 billion in unpaid state bills and is, in the words of the Chicago Sun-Times, in a “deep budget hole.” Obviously the total state revenue, which continues to rise, isn’t the problem. The real problem is that total state spending has jumped almost $1 billion between FY2004 and FY2005, including approximately $715 million more for the state payroll. Unable to pay its bills, the state still found taxpayer money for snowmobile trails, salmon breeding and pork.
Illinois’ government does not have a revenue problem; it has a spending problem, and it’s getting worse every year.