It looks like bleak days ahead for the state, especially if Congress doesn’t do something to avoid the “fiscal cliff.”
Testifying before the Illinois House Revenue and Finance Committee today (Thursday), Natalie Davila, head of research with the Illinois Department of Revenue, said tax revenues are about where the department expected in the first quarter of Fiscal Year 2013, and growth is projected in 2014 of 2 to 2.5 percent. But that would be wiped out if the nation goes over the “fiscal cliff,” where income tax breaks end and there are cuts to programs and services.
“These forecasts were predicated on the fiscal cliff not happening, of the can being kicked down the road sometime into the distant future,” Davila said. “So our concern is that while we can see in the first quarter that we’re meeting the revenue estimates, our preliminary analysis indicates if the fiscal cliff happens, it could generate a loss of revenue, anticipated revenue in [Fiscal Year 2013] of almost $200 million and even more shocking in [Fiscal Year 2014] almost $800 million.”
Meanwhile, the state doesn’t deny it is behind in paying bills to state vendors and Medicare providers. Jerry Stermer, director of the Office of Management and Budget, says the state could look at other ways to help pay vendors.
State Rep. Frank Mautino (D-Spring Valley) expressed concern that he hears from schools, vendors and health care providers on a regular basis about not being paid. “In addressing the solution for the bills in getting a payment cycle to where a vendor would even want to do business with the State of Illinois, do we have anything structured or planned under way for alleviating that specifically?” Mautino asked.
Stermer says there are solutions. “The governor’s interested in working with the General Assembly on a structured refinancing of this huge amount of unpaid bills – payables – and we plan to come to the General Assembly with a proposal in the next number of weeks to consider a refinancing of some of that debt,” Stermer said.
Stermer says the governor’s No. 1 focus is to reform the public pension system. He says that is critical in order for the state to free up funds for other priorities
