Date: August 4, 2010
Time: 11:00 a.m.
Place: Room 16-503 James R. Thompson Center, Chicago, IL
Topic: Northeastern IL University $6.5 million in Certificates of Participation

REVENUE: FY 2010 REVENUES PLUNGE OVER $2 BILLION—INCOME AND SALES TAX REVENUES SUFFER MAJOR HITS
Jim Muschinske, Revenue Manager

June revenues dropped $588 million to end the fiscal year. While the larger economic sources were mixed, the majority of the monthly drop was due to federal receipting. Similar to last month, not only was June a poor month for federal sources being receipted into the general funds due to origin of spending [from non-general funds], but it compared to a strong June last year when federal monies were made available through the federal stimulus program. June had the same number of receipting days as last year.

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For the fiscal year, base revenues were down $2.046 billion. Virtually all revenue sources have felt the recession’s impact; particularly the larger ones most closely tied to economic sources. Of that decline, $1.527 billion or approximately 75% was due to the falloff from the “Big Three” revenue sources-- personal income tax, corporate income tax, and sales tax. The recession’s impact on employment, corporate profitability, and consumer activity, conspired to challenge revenues on a monthly basis. Even large gains in federal sources earlier in the fiscal year ultimately vanished as reimbursable spending slowed and was moved to non-general funds.

In retrospect, it is hoped that FY 2010 forever will be viewed as the nadir of revenues. Unfortunately, the immediate future is still quite somber as a weak recovery effort continues to suppress optimism about a meaningful economic turnaround. In addition, reluctance in Washington D.C. to render continued financial assistance to the states could significantly jeopardize what is already a precarious financial picture.

ECONOMY: DISAPPOINTING RECOVERY
Edward H. Boss, Jr., Chief Economist 

The U.S. economic recovery from the worst recession in decades is approaching one year old this summer, yet there is much disappointment both in terms of its strength as well as in relation to most previous economic recoveries. Moreover, current business reports indicate the economy has hit a soft patch in recent months, although most forecasters foresee its continuation. At the same time, monetary policy already is extremely easy and there is growing resistance to further spending by the federal government due to huge budget deficits. In this climate, economic growth is likely to remain modest with prospects for any major improvement in the job market unlikely any time soon.