November 18, 2013
Only four months into the State of Illinois’ 2014 fiscal year, which began on July 1, 2013, annual revenue projections have increased by more than $300 million from the initial estimates. Positive first quarter results from the State’s sales tax receipts are being added to other one-time revenues already received this year to provide additional resources for the FY2014 operating budget.
According to the October revenue report from the legislature’s financial advisory agency, the Commission on Government Forecasting and Accountability (COGFA), the State can expect FY2014 General Funds revenues to total $35.8 billion, an increase of $369.0 million from COGFA’s May 2013 revenue estimates. The Commission’s previous projection totaling $35.4 billion was adopted by the House of Representatives on May 31, 2013 in House Resolution 389. This total was used as the spending target for the legislature as it completed budget deliberations for FY2014.
As previously discussed here, the amount approved in HR 389 included $300 million transferred from the Income Tax Refund Fund to the General Funds. The updated estimate includes the actual total of $397 million to reflect the actual surplus in the Income Tax Refund Fund from FY2013 transferred to the General Funds in FY2014. The Civic Federation’s report on the FY2014 enacted budget included the actual Income Tax Refund Fund transfer and showed that the additional $97 million in resources were needed to balance the budget after the General Assembly exceeded the original $35.4 billion spending goal, enacting a General Funds budget for FY2014 totaling $35.7 billion.
The latest estimate from COGFA includes other one-time revenues from legal settlements in FY2014 totaling $72 million. The funds are attributable to two separate legal settlements, one from the Attorney General’s office totaling $54 million and another from the Department of Healthcare and Family Services totaling $18 million.
The remaining $200 million revenue increase projected by COGFA for FY2014 comes from revised expectations for FY2014 sales tax revenues. At a November 5 COGFA meeting, staff testified that first quarter gains in sales taxes justified revising total FY2014 sales taxes to $7.5 billion from $7.3 billion. Actual results for July through September show that sales taxes collected in FY2014 exceed FY2013 totals for the same period by $150 million. The positive results appear reasonable considering that COGFA’s original FY2014 projection of $7.3 billion was slightly less than the actual results from FY2013 of $7.4 billion. According to the testimony, the increase was largely due to a surge in automobile sales after a long period of delayed purchases by consumers.
Neither COGFA’s October report on revenues nor the testimony included the amount by which actual sales tax receipts for the first quarter FY2014 exceeded the projected totals for FY2014.
The Illinois Department of Revenue, which provides separate revenue estimates and research, published a report on September revenues that showed sales tax revenues exceeding first quarter projections for FY2014 by $132.9 million. However, the more recently published October report shows sales tax collections slowing, as actual receipts were $2.5 million less than year-to-date projections. It should be noted that the Revenue Department’s annual sales tax projections for FY2014 are considerably higher than COGFA’s, totaling $7.6 billion.