April Monthly Briefing
THE PERFECT STORM SLAMS INTO APRIL RECEIPTS AS BASE REVENUES DROP $2.740 BILLION; FY 2020 NOW DOWN $1 BILLION AS EARLIER GAINS ERASED
Jim Muschinske, Revenue Manager
A combination of COVID-19 impacts, delayed tax filing deadlines, and comparative drop-off due to 2019’s “April Surprise”, all conspired to dramatically derail receipts as base revenues fell $2.740 billion. After managing to avoid much of the virus’ effects on March revenues, as foreshadowed in last month’s briefing, the impact on April’s receipts was unavoidable. In addition, the “tax day” deadline change to July 15th delayed approximately $1.3 billion in final payments into next fiscal year. And finally, the one-time nature of 2019’s “April Surprise” related to a surge in non-wage income taxes and federal sources, exacerbated this month’s comparative decline. April had the same number of receipting days as last fiscal year.
Excluding proceeds from the Treasurer’s Investment program as well as interfund borrowing, after incorporating April’s dramatic falloff of receipts, base general funds revenues have turned negative for the year—dropping $1.001 billion below last year’s levels [when those two items are included, the decline grows to $1.139 billion]. As discussed last month, through March, revenues had performed admirably with $1.739 billion in gains having been driven by specific transfers [Refund Fund and Capital Projects], comparatively better federal sources, court settlement proceeds, tax amnesty program efforts, and decent underlying performance from the larger economically related sources. Unfortunately, the previously discussed issues of COVID-19 and tax day deadline changes have significantly altered the fiscal year trajectory [the one-time nature of last year’s April Surprise, while impacting year-over-year performance, was always assumed in earlier expectations].
While a tremendous amount of uncertainty remains, with April now behind us, over the coming days the Commission will be recalibrating its revenue outlook for FY 2021 as well as updating its FY 2020 estimate. The revisions will utilize the most updated economic data, adjust for timing aspects related to policy decisions [tax deadline changes], and incorporate new expectations related to federal sources. When complete, the revised forecasts will be found under the Commission’s “Latest Publications” heading on this website.
THE ABC’S OF RECESSION AND RECOVERY
Benjamin L. Varner, Senior Analyst and Economic Specialist
The COVID-19 pandemic has been a body blow to economies around the world. The mandated closures of non-essential businesses in many states and the subsequent fall in economic activity has led many economists to say that the country has fallen into a recession. Over 30 million U.S. workers (including almost 820,000 in Illinois) have applied for unemployment benefits since the middle of March. Numerous forecasters such as Fitch, Goldman Sachs, Morningstar, IHS Markit, and the International Monetary Fund have a recession as part of their baseline economic forecast. This month the Commission will delve into what an economic recession is, how it is designated, and what types of recovery we could see if the country has indeed fallen into a recession.