Revenue Numbers Show a Sharp Decline in March 2023

General funds revenues, which cover the ongoing spending programs of State of Illinois operations, dropped sharply in March 2023.  The drop of $563 million in March 2023 cash receipts, put next to comparable figures for March 2022 cash inflows, signals the approaching fiscal challenges facing the State.  The FY23 budget, which covers State spending through the second quarter of 2023 up until June 30, 2023, is based on an assumption of healthy, booming State tax revenues.  The March 2023 revenue numbers reported by the Commission on Government Forecasting and Accountability (CGFA) are a warning that these assumptions may have to be modified or changed in the near future.  

As in previous months, the overall State of Illinois revenue trend for March 2023 was driven by changes in income tax payments.  The taxes paid in by Illinoisans and their employers as Personal Income Taxes dropped $384 million in March 2023 as compared to March 2022.  Even after part of this shortfall was set aside to reflect the participation of the Income Tax Refund Fund in this item of overall cash flow, Illinois personal income tax receipts were down $330 in March 2023.  This accounted for more than half of the overall March 2023 net revenue shift of $563 million.  Corporate income tax payments to the State of Illinois also declined sharply in March 2023.

Other lines within the State general funds revenue picture were flat to down in March 2023 as compared to the year-earlier month.  These included sales and use taxes, public utility taxes, cigarette taxes, taxes on liquor and alcohol, taxes on estates, and taxes on insurance activities.  It is not known whether this negative trend will continue in April, May, and June of 2023.  Based on worldwide movements toward slowing economic activity based upon higher interest rates and growing risks of international conflict, continued negative movement can be expected.