Eye On Illinois: Record revenue month no cause for celebration

In April, the state’s General Fund grew by $7.613 billion, the second largest monthly haul ever.

The only more prosperous period was April 2022, when the Fund collected $8.037 billion, goosed by federal stimulus programs.

This and other useful data come from the Commission on Government Forecasting and Accountability’s monthly report (tinyurl.com/COGFAMay25), which is essential reading for those interested in where Springfield gets its money.

The main reason for the increase was personal income tax receipts going up 20.3% to $896 million, per the report, which further noted that “Although the specific details of these gains will not be known for some time, the increase is likely due to a surge in final tax payments stemming from higher capital gains and interest earnings as a result of strong market conditions and investment returns during tax year 2024.”

Capitol News Illinois wrote about the report Monday in the context of ongoing budget negotiations for fiscal 2026. COGFA improved its revenue projection for next year by $266 million from its March estimate. But even at $54.5 billion, COGFA’s guess trails Gov. JB Pritzker’s February figure by $471 million.

Looking at the current fiscal year, COGFA suspects the state will end with total revenue of $53.9 billion. If that holds true, it compares favorably to the budgeted spending of $53.3 billion.

At this point, there are a couple of rhetorical avenues. One is to question the state’s finances overall, not just why we’re taking in $600 million than we want to spend, but why the annual outlay is that large in the first place. Fair, but not particularly fresh, given longstanding discourse about the size and scope of government.

Another is to consider this specific moment when economic uncertainty affects both the private and public sectors.

“Those capital gains revenue increases are not sustainable, so as we look at fiscal [2026], we should not expect that as we go into fiscal [2027], I think it’s going to be an even worse look,” COGFA Co-Chairman state Rep. C.D. Davidsmeyer, R-Murrayville, said last week.

There are a dozen tariff references in the monthly report. CNI quoted COGFA Revenue Manager Eric Noggle from a written passage on economic uncertainty: “The unknown implications of tariffs create many questions … impact on prices, and if these changes could lead to a recession. These complicating factors and their potential impact on tax revenues make the revenue estimate for [fiscal] 2026 very challenging.”

The red flags are flying. Increasing state spending in these conditions is irresponsible, and trying to generate additional revenue from potentially vulnerable sectors could have substantial consequences.

Unfortunately, as is often the case, voters and most lawmakers don’t yet have budget details. COGFA’s numbers are informative, but limited.

• Scott T. Holland writes about state government issues for Shaw Local News Network. He can be reached at sholland@shawmedia.com.