September revenue report looks good, but warns of storm clouds on the horizon
The Commission on Government Forecasting and Accountability (COGFA) has issued its report on the revenues collected by the state in September. The report found that Illinois’ fiscal situation was improved compared to one year ago – September 2020 when the state was deep in the pandemic – but warned about fiscal dangers in the coming months.
Overall, revenue was up from one year ago. Personal income tax receipts improved by $191 million, corporate tax receipts gained by $528 million and sales tax collections were up by $140 million. All are signs of improving economic activity. Money coming from Uncle Sam went up by $925 million.
The warnings from COGFA concerned the state’s growing debt. In August and September the state sold $493 million in bonds. The debt incurred from these transactions has relatively low interest rates, but rates which are higher than those charged to other states because of their better credit ratings. Illinois taxpayers will bear the burden of these higher repayment costs.
COGFA found that the ongoing spread of the COVID-19 Delta variant was causing a decline in consumer confidence in Illinois, which in the past has led to drops in large purchases such as new homes or cars – a problem already manifesting itself due to the worldwide semiconductor shortage. Drops in large purchases can in turn drive down such revenues as sales taxes and real estate transfer taxes.
We in state government need to heed these warnings and be more cautious when it comes to spending taxpayer money.
Public safety task force created to “study the rise of violence” in Illinois
Nine months after ramming through policing legislation; House Bill 3653, which was opposed by virtually every law enforcement group in the state; the Speaker of the House has created a Public Safety and Violence Prevention Task Force to “study the rise in violence and identify legislative actions to improve public safety in all Illinois communities.”
A good place to start might involve listening to our public safety officials and taking their concerns seriously, something which was sorely lacking from the discussions around police reform at the start of this year. In his letter making his appointments to the task force, House Republican Leader Jim Durkin wrote, “When illogical anti-police legislation is made law of the land, such as HB 3653, the message sent is that the good men and women who wear the badge are not a priority and cannot be trusted with keeping the streets and neighborhoods safe.” Durkin went on to note that the “constant vilification” of law enforcement officers “only demoralizes those who are sworn to serve and protect.”
It is undeniable that we have a crime problem in Illinois, and the daily headlines suggest that it is getting worse. There are a lot of good ideas out there for improving public safety. I hope we can put partisan ideology aside and correct the mistakes of the past as we work to keep Illinois safe.
Ribbon cutting in Watseka
In spite of the cloudy weather there were lots of smiles last Friday in Watseka as members of the Chamber of Commerce helped cut the ribbon and break ground for Nichols Paint and Fab’s new location at the corner of Illinois Route 1 and U.S. 24. This new location will be a state-of-the-art facility with a showroom. Thanks to all who attended and best wishes to Justin in this new endeavor. This will be a great asset for Iroquois County.
How much do we owe?
As of the time of this writing, the State of Illinois owes $4,476,089,340 in unpaid bills to state vendors. One year ago, the backlog stood at $7.8 billion. This figure represents the amount of bills submitted to the office of the Comptroller and still awaiting payment. It does not include debts that can only be estimated, such as our unfunded pension liability which is subject to a wide range of factors and has been estimated to be more than $141 billion.
While the figure at the top of the last paragraph looks very large (and it is) it has actually been much worse in the not-too-distant past. As you can see, our bill backlog is down from where it stood one year ago, but it has improved substantially from where it stood back in 2017. At one point that year, the state’s unpaid bill backlog stood at well over $16 billion, more than three times its current size.
Because state debts accrue more interest the longer they go unpaid, four years ago the debt was growing faster than we could repay it. In 2017 the state sold a series of bonds at lower interest rates than the growing debt, then used the proceeds from the bond sale to pay down about half of the debt. The remaining debt grew at a much lower rate, making it more manageable. Since that time, the Comptroller’s office has worked to pay off the debts as fast as possible. Paying these debts faster has a couple of obvious advantages: one, taxpayers get charged less interest, and two, vendors suffer fewer adverse effects because they don’t have bills left outstanding for as long.
One result of this improvement was the state seeing its credit rating upgraded slightly this year. It was the first upgrade in decades, and while Illinois still has the lowest credit rating among the states, at least it moved in the right direction. We need to keep this momentum going by passing responsible, balanced budgets and breaking our bad overspending habits.
More news from around the state