REVENUE: JUNE RECEIPTS DIP DUE TO AN EXPECTED WEAKER MONTH FOR FEDERAL SOURCES—FY 2021 BASE REVENUES GROW $6.792B—ECONOMIC SOURCES COUPLED WITH FEDERAL REIMBURSEMENTS RESULTS IN RAPID REVENUE RECOVERY
Jim Muschinske, Revenue Manager

Absent June 2020’s $1.2 billion of borrowing proceeds, base general funds revenues fell a modest $196 million in the last month of FY 2021. Despite another impressive month in performance of the larger economically related revenue areas [in part due to last year’s receipt timing patterns disrupted by the pandemic], an expected large drop-off in federal source reimbursements resulted in the overall June decline. The number of receipting days in the month were the same as last year.
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Excluding borrowing related activity, base receipts finished the fiscal year up a stunning $6.792 billion. In addition to a surge in federal sources, that exceptional growth also reflected the timing of income tax receipts related to last year’s [2020] filing deadline extension, as well as stronger underlying economic conditions as post-COVID normalcy returns by degrees. For the fiscal year, combined net income tax receipts were up $5.536 billion. While approximately $1.3 billion of those gains were attributed to the shift of FY 2020 final payments into early FY 2021, despite repeated upward revisions, strong income tax performance continued to meet and exceed expectations. With strong consumer spending reflecting stimulus payments, improving job picture, and improved consumer confidence, the year-long upward trend of sales tax receipts resulted in net receipts growing $1.113 million over last fiscal year.

REVIEW OF FY 2021 REVENUE ESTIMATES VS. ACTUAL

The below summary table as well as a more detailed table on page 6, displays and compares the last official estimates of both CGFA and GOMB that were released in the first-half of May. Despite both agencies making several significant upward revisions over the course of the fiscal year, as shown, FY 2021 ended up exceeding even late-stage attempts at capturing the impressive growth trajectory. In total, excluding borrowing related items, actual “base” receipts for FY 2021 finished $1.234 billion or 2.8% above CGFA’s last official May projection. In comparison, actual “base” receipt performance finished $1.901 billion or 4.4% above the GOMB revision released in May.

Overall, FY 2021 proved to be another challenging year for revenue estimating. While the Commission performed better in the estimates related to the larger economic related sources such as personal and corporate income tax as well as sales tax, the GOMB’s projections of transfers as well as federal sources ended the fiscal year closer to actuals.

MOODY’S UPGRADES ILLINOIS’ BOND RATING TO Baa2
Lynnae Kapp, Senior Analyst

Moody’s upgraded Illinois’ General Obligation bonds and Build Illinois bonds from Baa3 to Baa2, and the Metropolitan Pier and Exposition Authority from Ba1 (junk) to Baa3. “The upgrade of Illinois' GO rating to Baa2 from Baa3 is supported by material improvement in the state's finances. The enacted fiscal 2022 budget for the state increases pension contributions, repays emergency Federal Reserve borrowings and keeps a backlog of bills in check with only constrained use of federal aid from the American Rescue Plan Act. Illinois still faces longer-term challenges from unusually large unfunded pension liabilities, which are routinely shortchanged under the state's funding statute. These liabilities could exert growing pressure as the impact of federal support dissipates, barring significant revenue increases or other fiscal changes.” [Moody's upgrades Illinois general obligation rating to Baa2 from Baa3; outlook stable, Moody’s Investor Service, June 29, 2021]