Recession fears loom over revenue talks

Recession fears loom over revenue talks

ILLINOIS (IRN) — Gov. J.B. Pritzker’s administration has laid out its revenue estimate for the coming year for a House committee, projecting an increase in the near-term and noting predictions of an economic downturn ahead.


Coming up with a revenue estimate is part of the state’s budgeting process. The state’s constitution requires that the budget is balanced, but politicians have been able to get around that mandate. Illinois lawmakers have a long-standing practice of spending more than the state collects. The state hasn’t had a balanced budget since at least 2001.


On Thursday, the Governor’s Office of Management and Budget and the Department of Revenue shared revenue estimates for the coming fiscal year with the House Revenue and Finance Committee.


Committee chair state Rep. Michael Zalewski, D-Riverside, said it sounds like revenue will be fairly flat.


“I think there are some long term concerns about a recession, but in the immediate future, things are going to stay stable, which is good,” Zalewski said. “But you’d like to see a little more growth too, so we have to work around that.”


During the hearing, Department of Revenue Chief Economist Marty Johnson said the agency expects jobs and wages to increase slightly.


“We’re assuming employment growth and wages are trending in positive territory, which lends itself to higher levels of receipts,” Johnson said.


Administration officials also said economists predict there could be an economic downturn the fiscal year after next.


State Rep. Steve Reick, R-Woodstock, said Illinois isn’t prepared for that.


“We all know that when the United States or neighboring states get a cold, Illinois gets pneumonia,” he said.


Thursday’s hearing was the first round of hearings to estimate how much the state expects to bring in for the coming fiscal year, and some of the $38 billion in estimated revenue come from things that aren’t legal yet. Those numbers included hundreds of millions in new money from sports betting and recreational cannabis, both of which aren’t legal yet.


Committee member state Rep. Keith Wheeler, R-Oswego, said lawmakers need to be realistic

“It should be at the outset based on what we know we have coming in on real projections of current statute,” Wheeler said.


The state constitution mandates “proposed expenditures shall not exceed funds estimated to be available.” Wheeler said an official revenue estimate resolution hasn’t been passed for the five years he has been in office. Not having one is bad policy, he said.


“The General Assembly could come back and actually spend more of your money without ever saying ‘we’re going to meet the responsibility of actually having enough to pay for it,” Wheeler said. “That puts the taxpayers on the hook for more debt, more interest, bad government.”


Zalewski said passing an official revenue estimate during Gov. Bruce Rauner’s term would have been too difficult.


“It was going to rely on a lot of solutions that were going to cause a lot of people discomfort and if you tied people to a political vote before we had a budget, it was going to make it all the more difficult to pass something.”


As part of crafting an official annual revenue estimate, something that hasn’t been passed in years, lawmakers will hear from the bipartisan Commission on Government Forecasting and Accountability next week.