State revenue projections tend to be a dash of voodoo wrapped in smoke and mirrors, but this was extreme even for Illinois: Last week, it was announced the state in April got $1.5 billion more in personal income tax collections than anticipated.
The surprise gain – it works out to about 38 percent more than the projected amount — is a rare bright spot in a depressing financial climate dating back decades.
But let’s not break out the champagne yet. The state is still saddled with $8 billion in pending bills, a $3.4 billion deficit and $150 billion in pension issues.
The windfall did allow Gov. J.B. Pritzker to back off a potentially disastrous option to slow-walk statutorily mandated pension contributions and divert about $800 million. That's a good thing.
But the cash influx also is politically tricky for Pritzker, who has spent the past year-plus banging the drum of instituting a graduated-rate income tax and revenue-generators like new or higher taxes on plastic bags, e-cigarettes and insurance plans, as well as money from legalizing sports betting and recreational pot.
House Minority Leader Jim Durkin, R-Western Springs, said the $1.5 billion means "there’s no need to talk about raising taxes on bags, cigarettes, businesses or the middle class. And there’s certainly no reason to be even considering a graduated tax now.”
Yeah, good luck with that.
Pritzker and the Democrats are unlikely to back down.
"The truth is that manna from heaven may get us out of the desert, but it will not feed us for years to come," state Sen. Don Harmon, D-Oak Park, told The State Journal-Register. "This really emphasizes the need to pass the fair tax so that we can reform our antiquated income tax structure and pay for the government people from the state."
We still have fundamental questions about the graduated tax proposal, but suffice it to say the Illinois budget hole is so deep that the only way to dig out is through spending cuts and finding stable revenue sources.
But it starts with knowing what we're working with. What's troubling about the April surprise is that it wasn't predicted. The state Commission on Government Forecasting and Accountability forecasting office credited it to “very strong performances of both personal and corporate income taxes," but “a precise component breakdown is not yet available for April’s income tax receipts."
The state Department of Revenue, in a letter to lawmakers, was more salient, pointing to "the performance of the stock market, better federal reimbursement for Medicaid, the elimination of the federal state and local tax deduction and additional changes in the federal tax law" as factors.
In our view, such unreliability highlights just how much Illinois is on shaky ground and totally unprepared in the case of an economic slowdown.
If this is not a one-time windfall and the money continues, paying down pension costs and high-interest bills is a good place to start.