Legislature called into special session; state tax revenue increases slightly

Special sessions called for late June
Governor Rauner has called the House and Senate into special session beginning Wednesday June 21 and continuing through the end of June. As you know, the House adjourned May 31 leaving much work unfinished. With half the month of June having now gone by without any further movement, the Governor has summoned legislators back to Springfield to finish our work before the end of the fiscal year on June 30. This week, House and Senate Republican leaders introduced a new compromise package of legislation that will hopefully help break the stalemate that has crippled state government for more than two years.

I am glad that we will finally be getting back to work. Legislators should be in Springfield every day working on finding an agreement on a balanced budget with reforms. The clock is ticking and we need to get a budget in place before the new fiscal year begins on July 1. I am keeping my fingers crossed that all involved will use this opportunity to engage in good-faith negotiations and to produce both the budget and the reforms state government needs.

State took in slightly more in revenue last month
Every month, the Commission on Government Forecasting and Accountability issues a report on the amount of tax revenue collected by the state. Its most recent report showed that the state brought in an additional $143 million in May as compared to May 2016. That figure refers only to taxes, and not money that is brought in through other sources like sales of lottery tickets. The report suggests that the May increase came about because of increased revenues from personal income taxes paid by most Illinois employees.

There were some warning signs in the report too, namely the large drop in corporate income tax receipts, which fell by $72 million. The decline of almost one-half in year-over-year corporate income tax payments to the state reflected a continuing trend of U.S. business moving from C-class corporate taxpayers, which was the dominant business model in the past, toward the attribution of taxable revenues to pass-through entities, often organized as wholly-owned subsidiaries of holding companies. In response to this change, the Illinois Department of Revenue has re-classified much of its remaining business tax receipts as individual income tax receipts, paid at individual income tax rates.

Overall, these were good numbers for the month, but they come near the end of a fiscal year which was anything but good overall. For the first 11 months of this fiscal year (which ends June 30), Illinois general funds tax receipts were down by $604 million compared to last year. The decline was largely attributable to the fall in corporate income tax receipts, which were down by $909 million so far this year. Of course, all of this comes against the backdrop of the state’s more than $14 billion in unpaid bills.

36 Illinois firms on Fortune 500 list, others slide
Three dozen Illinois businesses made the most recent Fortune 500 list, but some had slid downward from last year. Leading the Illinois firms on the list was Walgreens Boots Alliance, which came in at #17 in the nation. The second-largest listed firm from Illinois was Boeing, which came in at #24. Two of the leading Illinois companies are based downstate: State Farm (#33) and Deere & Co. (#105).

Some Illinois firms slid down the list from last year. Caterpillar dropped 15 spaces to #74, and Sears Holdings relinquished 16 notches to #127. R.R. Donnelley & Sons, which has traditionally specialized in the printing of information on paper, spun off several of its operating units and took other steps to embark on a shift in its business model. It yielded 133 places, to #388. The presence of so many Illinois firms shows that in spite of the economic struggles of the state, Illinois still has enormous potential to again be the powerhouse of the Midwest’s economy. All we need are the right policies to nurture job growth and retain these employers.

Price survey shows Illinois drivers enjoying lowest early-summer gas prices in 12 years
As we head into the summer driving season, Illinois motorists got some good news from a recent survey of gas prices. The survey of the average price of gasoline in Illinois shows that the average driver could expect to pay $2.40/gallon in early June. This was the lowest price for Illinois gasoline during the early-June driving season since 2005. Of course, the prices will fluctuate as the summer goes on, and experts warned that prices are likely to increase in anticipation of heavy demand around the 4th of July, which is a peak-driving spike point.

This time last year, the average price for gasoline in Illinois was $2.53/gallon. The lower price comes from an increase in crude oil production from shale beds throughout the middle part of the U.S., particularly North Dakota and Texas. So much oil is being produced as to threaten the viability of many traditional oil production platforms that drill for and pump oil from the U.S. continental shelf in states such as California and Louisiana. The added cost of pulling up oil from underneath salt water may drive some of this production out of business. This and other factors could lead to a possible uptick in Illinois consumer motor fuel prices at a later time.

Did You Know?
While Illinois has had a system of public roads dating back to the 19th century, and a highway department since 1913, the Illinois Department of Transportation was created in 1972 – making Illinois the 14th state to create a transportation department. In 1971, Governor Richard Ogilvie called for the new department, saying, “opportunities for jobs and businesses exist in direct relationship to our ability to get people to and from their place of work, to bring new materials to industry and to deliver finished products to consumers.” IDOT brought together certain functions of the Department of Public Works and Buildings, Department of Local Government Affairs, State Police, Secretary of State, Illinois Commerce Commission, Superintendent of Public Instruction, Division of Waterways and Division of Highways.