State budget jeopardized
By Joe Baker
By Joe Baker
Revenues for the first quarter of fiscal 2002 were more than 7 percent lower than estimates used to prepare the current budget and almost $300 million lower than actual revenues for the period, according to a report from Illinois State Comptroller Daniel Hynes.
Hynes said the numbers do not reflect the full economic effect of recent events in New York and Washington. The financial impact of the terrorist attacks will become more evident in the next quarter, when September sales taxes are receipted and income tax withholdings begin to soften with more job layoffs, Hynes said.
Estimated payments in the next quarter will also reflect lower corporate earnings and any capital losses experienced due to the recent decline in equity markets, he added.
The findings lend support to warnings issued by Hynes and others last spring during budget preparations. The assumptions on which the 2002 budget is based were overly optimistic, as these numbers clearly demonstrate, Hynes said. With the tragic events of the past month, we are going to face greater challenges than we had already anticipated, he said.
The drop off in revenues already has affected the states ability to pay. Delays of up to nine days are being experienced in payment of bills, and bills on hand exceed available monies. At one point in September, funds were as much as $364 million short. Hynes foresees the need to use the states $226 million Rainy Day Fund in this fiscal year
Hynes has begun cost controls to deal with the economic situation. As a country, and as a state, we will pull through the economic challenges we face, he said. But in moving forward, we should pursue policies and agendas that promote long-term financial stability for the state of Illinois, Hynes added.