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TOTAL STATE REVENUES DIP
MODESTLY IN FY2009
By Jim Tobin
For the first time in
six years, since ITEF began tracking state revenue, total Illinois
state revenue is down from the previous year, according to data from
the Illinois Comptroller’s website. Total tax revenue for the first
9 months of FY 2009 decreased $742 million, 1.7%, over the same
period in FY 2008. This modest dip in state revenue is not a
fiscal crisis.
State legislators and
newly appointed Governor Patrick Quinn are trying to raise the state
income tax by 50%, raising the corporate income tax rate in Illinois
from 7.3% to 9.7%, making it the fifth highest of any state in the
US. This, combined with a 50% hike in personal income taxes, would
prevent the creation of 70,000 Illinois jobs. So far, personal
income tax revenue for FY2009 is down $120 million, 1.9%, from the
first nine months of FY2008. However, state income tax revenues
increased $2.3 billion in the two years ending June 30, 2008,
without a rate increase. Corporate income taxes have decreased
$235 million or 14.8% so far in FY09.
State sales tax
revenue dropped by $316 million or 4.4% while tax revenues from the
federal government were up $244 million or 2.5%. However, federal
revenue will jump by up to $11.5 billion over the next 19 months,
thanks to the federal stimulus plan. Once again, oppressive state
taxes caused Tobacco Tax revenues to decline, this time by $19.4
million or 4.2%, while the new statewide smoking ban contributed to
a massive drop in casino tax revenue, to the tune of $125 million or
24%. Motor Fuel Taxes did manage to increase in FY2009, going up
by $45.3 million or 5%.
The unfunded portion
of Illinois retired state and local employees’ pension and health
care funds now stands at $110 billion. That total can be reduced by
$50 billion without raising the state income tax by requiring
government employees to increase their contribution to the pension
fund by 5 percentage points. Additionally, government employees
should be required to pay at least 3% of their payroll for
retirement health benefits and at least $250/mo after retirement.
Under current law they pay nothing for either and receive health,
dental, vision and life insurance for themselves and their
dependents after retirement. This very reasonable requirement would
also save another $30 billion in unfunded health care liability.
Note that $250/month is less than most Medicare recipients pay for
inferior coverage.
Total state revenue
had increased beyond the rate of inflation during the six years
ending June 30, 2008, so the modest dip this year is hardly what
state politicians are calling a “revenue crisis.” It is a spending
problem. Had the state budgeted better and not just assumed that
revenues would continue to increase forever, the state would be
better able to withstand a downturn in the economy. Instead the
state went on a spending spree with little or no regard for the
future.
The ITEF analysis of
the first 9 months of FY2009 Illinois state revenue may be found on
our web site at www.ntui.org. |
