As part of its overall duties, the Commission on Government Forecasting and Accountability (CGFA), the budget-forecasting arm of the Illinois General Assembly, has been asked to generate a three-year budget forecast for Illinois. With the assistance of private partners with expertise in economic trend analysis, CGFA recently published its three-year budget forecast to cover fiscal years 2025, 2026, and 2027 (FY25-FY27).
The CGFA three-year budget forecast and scenarios largely extrapolate, going forward, various economic activity and revenue trends already familiar to Illinois lawmakers. Broken down into individual line items, the CGFA forecasters see several revenue lines operating with much more health and strength than others. From the completed FY23 until FY27, Illinois personal income tax revenues are seen as likely to increase by more than $4.2 billion, from $27.9 billion in FY23 to a projected $32.1 billion in FY27. This reflects continued pay increases for Illinois workers, minimal growth in Illinois employment, and some additional positive change reflecting the continued transfer of business income from “corporate income” to pass-through personal income.
CGFA shared three budget projection scenarios for the FY25-FY27 three-year period. Unfortunately, all of these scenarios show significant and growing State deficit spending, beginning in FY25, using the Governor’s proposed spending levels and programs. Arguably, the most realistic scenario offered by CGFA is Scenario #3. This Scenario #3 bases spending at the now-established 20-year average State spending growth rate of 4%. This projection sees the State’s general funds deficit growing to $6.581 billion in FY27. Below is a summary of the scenarios CGFA provided:
Scenario 1: Keep Accounts Payable at FY 2023 Level (in millions) – .2% Growth
FY25 Deficit – ($455)
FY26 Deficit – ($1,600)
FY27 Deficit – ($484)
Scenario 2: Maintain Accounts Payable at $3 Billion (in millions), 30 Day Payment Cycle -1.8% Growth
FY25 Deficit – ($455)
FY26 Deficit – ($1,893)
FY27 Deficit – ($3,000)
Scenario 3. Payment Cycle Continues to Grow – 20-Year Average Growth in Spending (in millions) – 4.0% Growth
FY25 Deficit – ($455)
FY26 Deficit – ($3,064)
FY27 Deficit – ($6,581)
CGFA closes their projections with a cautionary statement, warning that “looking into FY2025 and beyond, economic and tax revenue forecasts remain murky as the economy is expected to continue to slow. The State needs to continue to show fiscal discipline and demonstrate that the results of the past few years are not an anomaly.”