Mo' Money

I recently heard a news report that state governments all over the nation were taking in more revenue as their economies improved. Many states are suddenly running surpluses. While Illinois isn't going to see a surplus anytime soon, the revenue news is good.

State tax collections improved in the just-completed fiscal year, even exceeding budget experts' estimates.

Despite the good news, officials warn that Illinois is still digging its way out of the financial problems brought on by the recession of 2002 and 2003.

The Commission on Government Forecasting and Accountability said Wednesday that state revenues climbed by $712 million in the budget year that ended June 30, for a net increase of 2.8 percent over the previous year. That was $290 million more than the commission estimated last year when lawmakers were working to put together a fiscal 2005 budget.

[snip]

While state revenues are up, they aren't climbing fast enough to overcome deficits caused in 2002 and 2003. State spending continued to rise in those years even as tax collections dropped. As a result, the state still faces tight finances, said University of Illinois economist J. Fred Giertz.

"Revenues are increasing fine in percentage terms, but we are in such a deep deficit position that it's not going to make a whole lot of difference for a very long time," Giertz said.

Becky Carroll, spokeswoman for Gov. Rod Blagojevich's budget office, agreed that the improved revenue picture hasn't solved the state's budget problems.

If nothing else, this will make it even easier for next year's candidates for governor to pledge no new taxes. It's too bad there isn't the political will to squirell away revenues during boom times to help cover the revenue shortfalls that accompany recessions like the one we've just been through.