CHICAGO, July 3 (Reuters) - Illinois’ general funds revenue jumped $3.3 billion in the fiscal year that ended June 30, mainly fueled by higher income tax rates enacted last year, a state legislative commission reported on Tuesday.
However, the state continues to struggle with high debt in unpaid bills and unfunded pension funds despite the revenue boost.
Personal income tax collections were up $4.7 billion or 38.2 percent in fiscal 2012, while corporate taxes climbed $706 million or 31 percent, according to the Commission on Government Forecasting and Accountability. Sales tax collections rose by $393 million or 5.8 percent.
Those revenue increases were more than enough to make up for a 31.6 percent drop in federal funding due to the expiration of the U.S. stimulus act, the report said.
But even with the 67 percent hike in the personal income tax rate and 46 percent increase in the corporate tax rate enacted in January 2011, Illinois is still drowning in debt.
The state comptroller’s office has estimated Illinois ended fiscal 2012 with about $8 billion in unpaid bills and other obligations, including corporate tax refunds.
Illinois also has a huge $83 billion unfunded pension liability that was not addressed by lawmakers in the legislative session that ended in May. The Democrat-controlled General Assembly passed reforms aimed at cutting Medicaid spending along with a $33.7 billion fiscal 2013 budget that Governor Pat Quinn signed on Saturday.
The revenue outlook for that budget is cloudy.
The legislative commission said fiscal 2012’s strong revenue performance may not be repeated in fiscal 2013, citing uncertainties over U.S. and euro zone fiscal policies, the expiration of federal income tax cuts and the outcome of the November elections.
“More specifically, as related to state revenues, final income tax payments in FY 2012 were artificially high reflecting the implementation timing of the higher tax rates,” the report said. “Those same timing elements will result in reduced overall growth rates in FY 2013.”