SPRINGFIELD, Ill. (IRN) — A new report from Pew Charitable Trusts finds that tax revenue in Illinois is above estimates of where it might have been had the pandemic never happened.
A comparison of inflation-adjusted tax revenue between Jan. 1, 2020 and March 31, 2022, with estimates for the same period if collections had grown at the pre-pandemic, five-year average annual growth rate shows that Illinois’ posted 8.7% more in collections.
Only three states outperformed Illinois in tax revenue during that time. They were Idaho (16%), New Mexico (15.5%), and New York (10.1%).
State tax revenues grew by $5.5 billion in Illinois in the fiscal year that concluded on June 30, exceeding $50 billion for the first time in Illinois history.
Justin Theal, an officer of state fiscal health for Pew, said the pandemic altered consumers’ spending habits.
“Primarily from things like services, which are not taxed in most states, and during the pandemic with everyone at home, people bought a lot more goods in contrast, and goods are taxed in many, many states,” Theal said.
Nationally, state revenue benefited from strong growth in all major tax streams. Personal income taxes, which are the largest source of total state tax revenue, grew by an inflation-adjusted 11.3% in the first quarter of 2022. Sales taxes, which are states’ second-largest revenue source, posted an inflation-adjusted quarterly gain of 10.4%.
Preliminary monthly data from the Urban Institute shows that inflation-adjusted receipts continued to grow but at a slower pace through June 2022.
According to Theal, “while states’ finances have surpassed expectations at every turn since the pandemic’s start, policymakers now face an inflection point as mounting threats – including 40-year-high inflation, slowing economic growth, a possible recession and federal aid tapering off, are expected to weaken revenues and drive up spending going forward.”
By KEVIN BESSLER for the Illinois Radio Network
