CHICAGO, May 5 (Reuters) - Illinois’ fiscal 2014 revenue will be $588 million higher than previously expected despite a 19.3 percent drop in personal income tax collections in April, according to a report on Monday by a state legislative commission.
State officials had anticipated a steep drop in income tax revenue last month versus April 2013 when it jumped by $927 million due primarily to actions by taxpayers seeking to avoid a federal income tax increase in 2013. April is the biggest month for individual income tax collections given the mid-month deadline for the filing of annual tax returns.
“While April’s receipts did fall significantly, the falloff was considerably less than what was built into the earlier forecast,” the Commission on Government Forecasting and Accountability said.
The commission revised its full-year general fund revenue estimate to $36.66 billion, which is $588 million more than its last forecast in February and a $1.215 billion boost from May 2013.
However, the bipartisan commission of lawmakers said that even with the extra cash, the state’s current $3 billion pile of unpaid bills is expected to grow by the time the fiscal year ends on June 30.
Illinois’ chronic bill backlog, structural budget deficit and huge unfunded pension liability have weighed on its credit ratings, which are the lowest among the states.
For fiscal 2015, the commission raised its revenue estimate slightly to $34.66 billion from $34.5 billion in February. Revenue is expected to be nearly $2 billion lower than in the current fiscal year mainly because the personal income tax rate is scheduled to fall to 3.75 percent on Jan. 1 from a temporary 5 percent level that took effect in 2011.
Governor Pat Quinn’s fiscal 2015 budget proposal called for making the higher tax rate permanent, while softening the blow on taxpayers by also offering a property tax refund to homeowners and increasing the earned income tax credit for low-income workers. The Democratic-controlled legislature has a May 31 deadline to vote on the budget. (Reporting By Karen Pierog; Editing by Mohammad Zargham)