CHICAGO, Jan 8 (Reuters) - Illinois’ general fund revenue rose $815 million or 5.2 percent in the first half of fiscal 2014 compared to the same period in fiscal 2013 after a strong December, a state legislative agency reported on Wednesday.
Revenue from personal income taxes jumped 15 percent in December for a total 4.6 percent hike in the first six months of the fiscal year, while corporate income tax receipts, which rose 11.2 percent last month, were 9.3 percent higher than in the first half of fiscal 2013, according to the Commission on Government Forecasting and Accountability.
“Both personal and corporate income tax have performed at levels that, barring a near-term turn around, should result in an upward revision to the estimates scheduled to occur in late February,” the report said.
Revenue from sales taxes climbed 5.4 percent so far in the fiscal year, which ends June 30.
The $815 million in overall revenue growth came as relief to a state with $5.16 billion in unpaid bills, but the commission cautioned that nearly half of it was due to a $397 million income tax refund fund transfer to the general fund and that federal money continues to fall below projections.
In its next budget, Illinois faces a partial expiration of an income tax rate hike enacted in 2011, though the tax hike could be extended by the state legislature. On Jan. 1, 2015 the personal income tax rate is slated to drop to 3.75 percent from 5 percent, while the 7 percent corporate tax will fall to 5.25 percent, according to the state revenue department.
The state continues to struggle with a structural budget deficit as well as the backlog of unpaid bills, according to the Illinois Comptroller’s website. Long-awaited reforms to reduce Illinois’ nearly $100 billion unfunded public pension liability were enacted last month but are being challenged in court and are not set to take effect until June.
Public school teachers and administrators and an association for retired state workers have filed lawsuits aimed at voiding the pension law on state constitutional grounds.
The lack of a pension fix led credit rating agencies to pound Illinois’ bond ratings to the lowest levels among states. Standard & Poor’s Ratings Services last month revised the outlook on Illinois’ A-minus rating to developing from negative, indicating the rating could be raised or lowered over the next two years depending on what happens with pension reform and the budget deficit.