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Legislative Action
By MICHAEL D. KLEMENS Fiscally it has been a tough year and a half for Gov. Jim Edgar and for state government. The financial crunch has forced cuts to state programs and layoffs of state workers. Lack of cash promises to force closing of state parks and has precluded the kind of new spending that lawmakers like to approve in election years. The hallmark of state finance has become bills that come due but go unpaid for lack of cash. On December 31, 1990, two weeks before Edgar took office, the comptroller was holding $179.3 million in bills that the state lacked the funds to pay. Over the ensuing 17 months that backlog has consistently increased, and it stood at $709.7 million on June 12, 1992. Only twice has the backlog dropped below where it stood when Edgar took office. (See table.) The first was in May 1991, when the state was flush with income tax receipts. The second time was in July 1991, when the standoff between Edgar and lawmakers over adoption of a budget left the comptroller without authority to pay new bills. In fact for nine consecutive months, from August 1991 through April 1992, the backlog increased each month. In August the state borrowed $185 million, and the backlog increased. In April the backlog would have decreased, but the comptroller was setting aside the money to repay the $185 million loan and its $8 million interest payment. Illinois' anemic economic performance is one reason for state government's plague of money problems despite government spending cuts both in January and July of 1991 and again in January 1992. Through the first 11 months of fiscal year 1992 (July 1, 1991, through May 31, 1992), growth was poor in the state's primary revenue sources — the income tax and the sales tax. Sales taxes produced 11-month receipts totaling $3,660 million, an increase of $98 million or 2.8 percent over the first 11 months of fiscal year 1991. In the fiscal year 1993 budget that Edgar presented on April 7, fiscal year 1992 sales taxes were presumed to grow 3.6 percent. And in the original fiscal year 1992 budget approved last July, sales tax revenues had been projected to rise 8.1 percent. Growth has been nearly as bad in income tax receipts. Income taxes include both the tax paid by individuals and that paid by corporations. For the first 11 months of fiscal year 1992 corporate income tax receipts were $481 million, or 3.7 percent higher than the year before. Edgar's fiscal year 1993 budget presented in April predicted a decline of $7 million (1.3 percent) in fiscal year 1992 receipts. His original fiscal year 1992 budget had projected an 11.9 percent increase in corporate income taxes. For individual income taxes, fiscal year 1992 receipts were $4,063 million for the first 11 months of the fiscal year, an increase of 3.9 percent over the same period the previous year. Edgar's fiscal year 1993 budget presumed 5.8 percent growth for fiscal year 1992. His original budget last July had presumed 7.8 percent growth in individual income taxes. The culprit here is economic malaise, a fact made more obvious when certain extraordinary revenue increases that resulted from changes in tax laws are taken into consideration. The comptroller estimates that $88 million has been received in the general funds because of a law changed in October to require businesses to submit tax collections to the state 10 days earlier. Without the money from the accelerated collections, the increase in collections would have been a mere $10 million, putting the "base" growth in sales tax receipts at a tiny 0.3 percent. Illinois' anemic economic performance is one reason for state government's plague of money problems despite government spending cuts . . . In corporate income tax receipts, nearly all the $17 million increase in state receipts came from the reduction in the share given local governments as pan of last year's budget balancing compromise. For the first 11 months of the fiscal year the comptroller put that increase to the state at $15 million. Another $4 million came from a reduction in the amount set aside to pay for tax refunds. In essence, when these increases are discounted as shifts of receipts, the corporate income tax base lost 0.4 percent. In individual income tax receipts, the $152 million increase to state government resulted largely from the receipt of $127 million that had previously gone to local governments. However the state general funds lost another $27 million from a change in the amount set aside to pay refunds. All told, base growth in individual income taxes was $52 million, or 1.3 percent. The backlog of bills is perhaps the clearest single example of Illinois' financial problems. The abominable economic performance illustrates why Illinois cannot catch up. With its nonperforming revenue tax base, the state is broke.
26/July 1992/Illinois Issues |
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