The State of Illinois projected a major loss of income tax revenues in FY2015 due to the reduced rates for individuals and corporations that took effect on January 1, 2015. However, corporate income taxes have taken a steeper decline than originally projected and began to fall even before the rate declined to 5.25% from 7.0% halfway through the fiscal year. The December 2014 monthly revenue report from the Commission on Government Forecasting and Accountability (COGFA) showed corporate income…
According to a recent study, the State of Illinois does not set aside enough revenue to account for fluctuations in its volatile tax sources and needs to improve its rules for making rainy day fund deposits in order to prepare for future financial challenges. The extensive report includes an in-depth study of the last 25 years of State revenues, previous legislation intended to establish a rainy day fund in Illinois and a 50-state review of best practices for managing rainy day funds. As…
A drop in Illinois’ income tax rates—and uncertainty about the implementation of pension changes—could cause the State’s backlog of unpaid bills to grow to $9.9 billion by the end of the 2016 budget year, according to a new forecast by Governor Pat Quinn’s office. Along with the decline in income tax revenues, the three-year projection for the State’s general operating budget through FY2018 assumes an increase in expenditures, mainly for pension contributions and for health insurance for…
This Marketplace Morning Report discusses the expiration of Illinois' temporary income tax increase on January 1, 2015. As discussed here, the reduction will lead to a revenue loss of $1.9 billion in FY2015, net of any underlying economic growth. This report also mentions the Civic Federation's recommendation to expand the income tax base to include retirement income as part of a comprehensive strategy for stabilizing the State's finances.
The following posts were among the most highly read on the Institute for Illinois’ Fiscal Sustainability’s blog in 2014 and represent the most closely followed Illinois fiscal issues of the year: State pension reform and the State budget. States Face Legal Challenges Over Reduced Pension COLAs January 3, 2014 This blog reviews legal challenges to reductions in state pension COLAs in several states, considering the basis of the lawsuit and the state’s level of constitutional pension…
On a preliminary trip to Springfield after winning the November election, Governor-elect Bruce Rauner held a press conference to draw attention to some of the gimmicks included in the current State budget, including interfund borrowing. Mr. Rauner called the plan to use $650 million borrowed from Special State Funds for FY2015 General Funds operations “fundamentally wrong.” The Governor-elect critiqued the practice, known as interfund borrowing, due to the requirement to pay back the funds…
Full analysis praises District’s long-term planning, updated pension funding goal In an analysis released today, the Civic Federation supports the Metropolitan Water Reclamation District’s (MWRD) FY2015 Tentative Budget of $1.3 billion and praises the organization’s continued use of long-term financial planning to guide its operations and future projects. However, the Federation is concerned that the District’s FY2015 budget and five-year financial projections through FY2019 reflect annual…
The Civic Federation supports the Metropolitan Water Reclamation District’s tentative budget of $1.3 billion and praises the organization’s continued use of long-term financial planning to guide its operations and future projects. However, the Federation is concerned that the District’s FY2015 budget and five-year financial projections through FY2019 reflect annual maximum increases to its property tax levy at a time when other local governments are minimizing their property tax impact.…
The Illinois House adjourned on Wednesday, December 3, 2014 with no further session days scheduled before the 99th General Assembly begins in January 2015. The Illinois Senate is expected to adjourn on December 4, 2014 and has one addition session day scheduled for January 13, 2015. This will mark the end of the 98th General Assembly. At the end of each two-year legislative session, all of the bills not passed by both chambers of the General Assembly are cleared from the legislative agenda and…
In an analysis released today, the Civic Federation supports the Chicago Park District’s proposed FY2015 operating budget of $448.6 million. The proposal accommodates increased employer pension contributions mandated by the District’s 2014 pension reform legislation while holding the property tax levy relatively flat and expanding programming. The full 55-page analysis is available here. “We applaud the Chicago Park District for effectively balancing the demands for increased pension funding…
