NASL member firm Third Reading Consulting Group shares the latest legislative news below.
GOMB Increases FY 2024 Revenue Projection and Proposes $1B Supplemental Budget
The Governor’s Office of Management and Budget (GOMB) released its annual Fiscal and Economic Policy Report on November 15. Illinois’ FY 2024 budget took effect on July 1, 2024, with a yearly conservative revenue projection of $50.611B. Due to a few revenue increases that have already occurred over the first four months of the fiscal year, GOMB increased its revenue forecast by $1.406B to $52.017B. This includes a projected $54M increase in individual and corporate income tax, a $161M increase in sales tax, a $396M increase in transfers, a $405M increase in federal sources, and a $390M increase across all other sources. The increase in transfers into the General Revenue Fund is primarily the result of stronger-than-anticipated tax performance in FY 2023, leading to a one-time payment from the Income Tax Refund Fund that is $255M greater than initially estimated. Additionally, transfers from the Lottery Fund were increased by $41M. Federal revenues were increased due to a one-time retroactive draw for Medicaid reimbursement due to a computing error at the Department of Human Services (DHS) and the Department of Healthcare and Family Services (HFS).
The original FY 2024 budget estimated spending of $50.428B. Given the $1.406B increase to projected FY 2024 revenues, GOMB has proposed a $1B supplemental budget. This supplemental budget will fund increased caseload pressures at the Department on Aging and DHS, amounts needed to cover delayed FEMA reimbursements to HFS for COVID-related nursing staff support costs for hospitals, outstanding Department of Innovation and Technology (DoIT) bills, increased group insurance costs at the Department of Central Management Services, and potential DHS spending pressures related to asylum seeker costs.
In addition to the supplemental budget, GOMB has proposed setting aside an additional $60M for the Budget Stabilization Fund, for a total contribution of $198M in FY 2024. After the increased revenue estimate, the supplemental budget, and the proposed rainy-day fund contribution, GOMB now projects spending of $51.595B in FY 2024 for a surplus of $422M. Surplus funds could be used to make additional pension payments above the statutory requirement, further contribute to the rainy-day fund, or cover unexpected costs at the end of the fiscal year.
Illinois Earns Credit Rating Upgrade from Fitch
On November 7, Fitch Ratings upgraded Illinois’ General Obligation bond rating from BBB+ to A-. This is the state’s ninth bond rating upgrade since 2021, and all three major credit rating agencies now rate Illinois’ credit in the “A” category for the first time in nearly a decade. Fitch cited responsible budgeting, growing rainy day reserves, significantly reducing the unpaid bill backlog, and increased fiscal transparency as reasons for the credit upgrade.
Fitch stated that further building rainy day reserves to 10% of spending, normalizing accounts payable, and decreasing the gap between the actuarially determined pension contribution and the state’s actual pension contribution could lead to future rating upgrades from Fitch.
On the flip side, reversion to previous irresponsible fiscal decision-making, delayed budgets, and unsustainable fiscal measures such as pension funding deferrals could lead to future rating downgrades. Passing budgets that include significant new spending without offsetting revenue increases could also lead to a downgrade from Fitch.
Important Upcoming Dates – Statewide
January 16 – 2024 General Assembly Session Begins
January 19 – House and Senate LRB Request Deadline
February 9 – House and Senate Bill Introduction Deadline
February 21 – Governor’s Budget and State of the State Address
March 15 – Senate Committee Deadline
April 5 – House Committee Deadline
April 12 – Senate Third Reading Deadline
April 19 – House Third Reading Deadline
May 3 – Opposite Chamber Committee Deadline
May 17 – Opposite Chamber Third Reading Deadline
May 24 – Adjournment
May 25-31 – Contingent Session Days for Budget