The CGFA report included State revenue numbers for June, the final month of Fiscal Year 2022. For the first time in history, Illinois reported more than $50 billion in general funds receipts. Over two-thirds of this money, more than $35.9 billion, came from corporate and personal income tax payments. The federal American Rescue Plan Act (ARPA), enacted in March 2021, was by far the most significant single factor in the Illinois budget picture in FY22. Most of the ARPA money transferred to Illinois under this federal Act went to the State, and to beneficiary local governments and school districts. During the twelve-month period beginning on July 1, 2021, local governments, school districts and the State created jobs that increased State income tax receipts. Newly employed people bought goods and paid State sales tax.
This was good news for the State’s current financial condition; however, the report also indicates that the strong revenues for FY22 were paced by a massive one-time infusion of federal tax money. Meanwhile, runaway inflation and recession worries continue to loom on the horizon because of this cash infusion, and the long-term forecast of Illinois’ economic health remains unclear.
CGFA does not expect this trend of soaring revenues to continue into FY23. The office, a nonpartisan budget forecasting arm of the Illinois General Assembly, warned lawmakers at the close of the FY22 fiscal year that they see “reduced revenue expectations for the upcoming fiscal year” in FY23. The one-time nature of much of ARPA’s cash infusion, together with challenging economic conditions relating to inflation, are seen as likely to create a revenue slowdown as Springfield moves into FY23.