State financial news reads like a horror story
Monday, July 12, 2010
State Comptroller Dan Hynes’ quarterly reports are starting to look like part of the “Twilight” vampire saga, but instead of the undead, we have the unpaid and red ink stands in for red blood.
No one is even trying to drive a stake through the heart of the state’s undying financial problems and instead of silver bullets, lawmakers and the governor are handing out silver spoons.
The year-end report notes that sales tax receipts dropped nearly 7 percent — $465 million — in the last fiscal year.
But Gov. Pat Quinn signed a bill Wednesday that will cost the state an estimated $20 million to $50 million in lost sales tax revenue.
How much tax revenue will be lost because of the “back-to-school” sales tax holiday Aug. 6-15 depends on whether the “holiday” spurs people to use their tax savings to make additional purchases that are subject to the full tax.
That’s what stores, who supported Senate Bill 3658 through the Illinois Retail Merchants Association, are banking on. They are hoping to see aisles full of shoppers for those 10 days in August, adding a few impulse buys to those school clothes and supplies.
We can’t blame retailers for seeking such a boost, and a lot of struggling families could benefit from the tax break. But there is no requirement of financial need to get the tax break.
Furthermore, even though the law says “the purchase of school supplies for use by persons other than students for use in a course of study” are not eligible for the tax break, that will be next to impossible to enforce. Tax police aren’t going to follow you home to see if adults are using reduced-tax pens to do newspaper crossword puzzles.
And even if the cash registers are busy Aug. 6-15, will there be a big dropoff in customers in the weeks that follow? How will that help retailers?
It certainly won’t help the state of Illinois close its revenue gap.
By the way, Quinn’s Republican opponent in the governor’s race, state Sen. Bill Brady of Bloomington, voted for the tax holiday.
Hynes notes in his latest report that “Illinois ended the year in the worst fiscal position in history.”
The delay in paying bills is up to 153 working days compared to 99 working days a year ago. The backlog of bills and transfers to other state funds was $4.712 billion at the end of June, compared to $2.785 billion a year ago.
And there are still bills to be submitted from Fiscal Year 2010 — bills that Hynes said the state might have difficulty paying — even by the extended deadline of December — without more borrowing as well as securitization of the state’s tobacco settlement payments.
When will state officials quit howling at the moon and actually do something to solve the state’s financial problems — instead of making them worse?