POSTPONED-November 17, 2020 Meeting Notice-POSTPONED
Date: November 17, 2020
Time: 9:00 a.m.
Place: Room C-1, Stratton Building, Springfield, IL
Topic: Update to FY 2021 Revenue Outlook
October Monthly Briefing
SALES TAX BUOYED BY CONSUMER SPENDING ON GOODS
Benjamin L. Varner, Senior Analyst and Economic Specialist
Despite the on-going COVID-19 pandemic, sales tax receipts have rebounded from the large declines seen in the spring. While total consumer spending remains down compared to pre-COVID levels due to lower spending on services, consumer spending on goods, which makes up about one-third of consumer spending, is up. Since Illinois sales tax are primarily based on the sale of goods instead of services, sales tax receipts have similarly rebounded…
However, while sales tax receipts have out-performed thus far, there is no guarantee that this trend will continue. As the season changes from fall to winter, COVID-19 continues to limit economic activity. In fact, all regions are now under varying degrees of enhanced mitigation requirements. The longer the pandemic goes on, the more likely temporary closures will become permanent. This could lead to more long-term unemployment worry and a retrenchment in consumer spending.
REVENUE: WHILE ECONOMIC SOURCES AGAIN POST MODEST MONTHLY GAINS, OVERALL OCTOBER REVENUES DROP DUE TO MUCH WEAKER FEDERAL SOURCES AND ONE-TIME 2019 COURT SETTLEMENT PROCEEDS
Jim Muschinske, Revenue Manager
Base October general funds revenues fell $366 million overall. A very poor month for federal sources which fell $231 million coupled with a sizable year-over-year falloff of $207 million in “other sources” due to October 2019’s court settlement related to drug company recoveries via the Attorney General’s Office [valued at approximately $193 million], were more than enough to offset gains from income and sales taxes.
Despite the pandemic and continued economic uncertainty it has caused, through the first one-third of FY 2021, base receipts are up $472 million. The growth reflects the surge in July income tax receipts related to the filing deadline extension. Through October, combined net income tax receipts are up by $1.545 billion. While net sales taxes are up only $54 million, that modest yet surprising gain serves to demonstrate the consumer’s recovery efforts from COVID-19 driven economic disruptions.