CHICAGO (Reuters) - Illinois’ fiscal 2011 revenue jumped nearly $3.4 billion over fiscal 2010 collections due mainly to a big income tax rate hike and a tax amnesty program, a legislative commission reported on Thursday.
But even without those two factors there was evidence that collections were perking up, the Commission on Government Forecasting and Accountability said, adding “revenues were recovering from last year’s dismal showing which saw receipts plunge over $2 billion.”
Sales tax collections, for example, climbed $525 million, although some of the increase was due to the amnesty program, according to the report. Individual income taxes were up $2.87 billion, while corporate taxes came in $628 million higher during the fiscal year that ended June 30.
Facing a projected $12 billion deficit heading into fiscal 2012, Illinois in January enacted a 67 percent increase in the personal income tax rate and 46 percent hike in the corporate tax rate.
Even though its revenue picture may be improving, Illinois remains in a financial hole as the state comptroller’s office expects to push about $8.3 billion of fiscal 2011 unpaid bills and other obligations into fiscal 2012. Also, much of the money from the tax increase has been allocated to pension payments and Medicaid.
Illinois’ widening structural deficit, huge unfunded pension liability, inability to pay its bills on time, cascading bond ratings and propensity to borrow its way out of financial problems have made the state a major worry in the $2.9 trillion U.S. municipal bond market.
Meanwhile, on Thursday, the American Federation of State, County and Municipal Employees Council 31 said it was seeking a ruling from an independent arbitrator to enforce a scheduled pay raise for unionized state workers that Governor Pat Quinn said was not paid for in the new state budget he signed last week. The move affected about 30,000 state workers.
AFSME said in a statement that it continues to review legal options, including filing a lawsuit in state or federal court, and that informational picketing has been scheduled for Tuesday at worksites throughout the state.
Reporting by Karen Pierog; Editing by James Dalgleish