Aside from the other effects of the crash now underway, especially the more important human aspect, the near term hit to state and local revenues will be challenging for Illinois and other troubled states, and perhaps a game changer.

We probably won’t see hard numbers start to come out for Illinois until the first week in April when COGFA delivers its monthly state revenue report for March. The “big three” revenue sources for the state are sales, corporate and personal income taxes. Sales tax revenue no doubt will decline, although initially it may be offset by the burst of sales to people storing up food and other essentials. Corporate and personal income tax revenue shrinkage probably won’t show up until later, but it will come and will be large.

Nobody knows how long the current crisis will last. However, even if things return to normal well before the end of the year as I for one am hoping, a big hole probably will be blown in Illinois’ pending budget for 2021, which starts July 1. And the deficit left for 2020 surely will be bigger than expected.

The sharpest percentage drop may come in gaming revenue, on which the budget increasingly relies. The pending $42 billion Illinois budget proposal assumes about $1 billion from lottery and casino revenue alone. Gaming revenue drops hard during economic slowdowns. According to COGFA, regarding the last recession,

Illinois’ statewide adjusted gross revenue figures followed an -18.3% decline in FY 2009 with subsequent declines of -5.0% in FY 2010 and -3.8% in FY 2011. Casino admissions also faltered with a decline of -7.1% in FY 2011. In FY 2012, casino figures finally improved as adjusted gross receipts and admissions increased 21.5% and 22.7%, respectively.

Moody’s ranks Chicago and Detroit as the only two major cities unprepared for a recession. The state as a whole along with New Jersey are the two least prepared states, it also says.

It appears we are about to find out. We will also find out what the credit rating agencies say.

UPDATE: A municipal bond banker also reminded me that existing bond issuers are required to provide additional disclosure of material events, and the impact of this crisis is clearly that. The required timing for that is unclear to me.

Mark Glennon

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Poor Taxpayer
7 months ago

Get ready to pay big big tax increase to make up for the huge pension short fall.
Cops, teachers and firemen are retiring to Florida at young ages (45) to luxury homes off the poor honest hard working taxpayer. Get ready to work till you are 70 if you choose to stay in Illinois.

Riverbender
7 months ago

My community is in the process of building a skating rink with State grant funding; see the State has plenty of money to go around.

Poor Taxpayer
7 months ago

Many people from Illinois are embarrassed to tell anyone out of state where they live.

Poor Taxpayer
7 months ago

Its only money. Run for your economic life. The states that are growing like mad are ones that are low tax states. Say and pay or run to fun and sun, it is your choice.
Good luck staying healthy with this virus, good luck being enslaved to the tax man.
Illinois is DOA.

Susan
7 months ago

Now is the time for every community in Illinois to calculate whether they can afford certain public services or not. Consider fire departments. What percentage of your home value annually is the cutoff point for concluding it is cheaper to let it burn down than fund a fire department? Insurance companies calculate these percentages all the time, and use the calculated odds to determine risk premiums. In Woodstock IL, the fire&rescue district taxes 0.4% of full fair market home value. That implies odds of 1 in 250 every year that your house will burn down. (Leave out the “rescue ”… Read more »

nixit
7 months ago

Look for the JB Crew to use the virus as leverage for two things: fair tax and pension re-amortization. JB will now claim the state needs an income tax hike period to fill budget gap, never once noting revenues were never going to be enough for his spending projections, virus or no virus, and he never pulled back on spending to correspond with reduced revenues. Then the legislature will attempt to paint the stock market crash as a reason to re-amortize the pension debt, never once noting that pension liabilities grew even during a historic bull market run. No doubt… Read more »

James Paluch
7 months ago
Reply to  nixit

Yes thats pretty much whats gonna happen. Illinois will bleed everyone until theres no-one left. Glad I left 6 years ago. Saved 14k in state taxes this year by not living in Illinois and moving my business to Texas. Food sucks here tho.

nixit
7 months ago
Reply to  nixit
Poor Taxpayer
7 months ago

Run for your economic life.
A shut down for 30 to 45 days will drain every dime Illinois has. Pensions will go bust and taxpayer must make it up. Cops, teachers and Firemen need luxury homes in Florida and you will pay, pay, pay.

Hank Scorpio
7 months ago
Reply to  Poor Taxpayer

I’m starting to think you are a troll from capitol fax trying to make WP look bad…

Bross
7 months ago
Reply to  Hank Scorpio

I noted some sarcasm in Poor Taxpayer comment. 🙂

Hank Scorpio
7 months ago
Reply to  Bross

He says the same stuff on every single article. Its annoying and a good way for others to dismiss WP as a fringe outfit.

Shirley Miller
7 months ago
Reply to  Hank Scorpio

Someone can comment anywhere they like, a newspaper, Facebook page or blog. The blog doesn’t own that person, that person isn’t a resident of a blog, so someone can’t be “from” some blog.
That being said, I doubt saying the same drive by over and over like some people are doing is adding to the discussion or influencing anyone.

Hank Scorpio
7 months ago
Reply to  Shirley Miller

Actually, no they cant. They are not protected by the first amendment because these are private institutions and they can censor and ban anyone they like. If someone started posting pornographic images or death threats here on WP, would you not expect Mark to ban them?

Shirley Miller
6 months ago
Reply to  Hank Scorpio

When I said “can” I meant ability to, I wasn’t suggesting people threaten others. I wasn’t trying to make a first amendment argument.

If I comment on Wirepoints it doesn’t mean I’m FROM Wirepoints. I’m not an employee. That is what I meant.

s and p 500
7 months ago

People always say USA is the only major industrial country that doesn’t have “free” health insurance. Okay, they have it in Europe so how did it get completely out of control in Italy?

Doug
7 months ago
Reply to  s and p 500

Europe pays zero for national defense, they provide free health care on the backs of the USA. BTW, the government is terribly ineffective at being a provider.

joe blow
7 months ago
Reply to  s and p 500

Italians kept their borders open with China because they didn’t want to be seen as racist. I’m not joking

Douglas
7 months ago

I’m thinking that by the time this is all over, things will never be “normal.” This virus isn’t going to kill a billion people, but it’s 10-12 times more deadly than the flu (for every one). We all know higher at risk people like the elderly and are curbing behavior to limit exposure.

My opinion of what could happen: Lots of people very sick, lots of people dead (not millions), healthcare overwhelmed and a near economic depression. I hope I’m wrong.

debtsor
7 months ago
Reply to  Mark Glennon

China has basically curbed new cases. Factories are slowly restarting. China will be slow for a while as the rest of the world tries to curb their own new cases which is less demand for their products. Five or six months from now economic activity will be booming as critical sectors of manufacturing reshore now that the major risks of globalization have been exposed. This will be old news by the time the election rolls around, and the newest topic will be Biden’s obvious dementia on the campaign trail. The stock market will be booming; the time to buy is… Read more »

s and p 500
7 months ago
Reply to  debtsor

On the “Geeks and Gamers” you-tube channel, Jeremy thinks the media has blown this totally out of control which is true to some degree. But what do you expect from MSM. The runs on toilet paper are crazy and some people who routinely engage in unsafe sex are suddenly worried about Covid-19.

MikeH
7 months ago
Reply to  s and p 500

This. Since the impeachment angle didn’t work, they’re trying to pull a Katrina now.

Shirley Miller
7 months ago
Reply to  MikeH

I don’t understand the comment. Who is “they” and what is “pulling a Katrina”?

MikeH
7 months ago
Reply to  Shirley Miller

The media using a calamitous event to push a narrative, just as they did in 2005.

Indy
7 months ago
Reply to  debtsor

This is a buying opportunity for stocks but not until we hit bottom & the vix cools down. Once the vix is under 30 I’m in.

Danny
7 months ago
Reply to  Douglas

Same was said after 9/11 and 2001 anthrax incidents about never being “normal”, but we are still here. Normal gets redefined; the markets like everybody else are uncertain what normal will be, but as a nation we are resilient.

Susan
7 months ago

It is time to ask point blank: teachers, school administrators, municipal officials: do you consider your lives more valuable than doctors and nurses? Because you insist to get paid by them.More than they earn per hour, without the guarantees you enjoy. And they work under a cloud of professional liability risk you cannot even imagine. No matter what, though, you demand your entitlements. Before doctors and nurses have money for themselves and their families, they owe you. And next year they owe you 3% more than this year. And not only do you demand their money, but also clear title… Read more »

mqyl
7 months ago
Reply to  Susan

If you’re talking about retirees, your three percent annual increase is accurate. For working teachers, figure around 5-6 percent per year raises for the contracted yearly raises and prorated step increases.

Freddy
7 months ago
Reply to  mqyl

If I’m not mistaken the teachers in Palatine school district signed a 10 year contract a few years back with a total of 40% increase in salaries over that time and little if any increases in health care costs.

mqyl
7 months ago
Reply to  Freddy

The Palatine contract is for 2.5 percent for the first four years, and 6 percent for the last six, equating to 3.4 percent raise per year. Add the prorated step increases to that, and they average around 5 percent per year.

Fed up neighbor
7 months ago
Reply to  Susan

Again, another great point about are doctors and nurses. Like I said before I have a daughter who is a traveling nurse and works in North Carolina now, she is concerned, but like she said I have a job to do, people need me. Another daughter puts her life on the line daily being a firefighter paramedic, again, people need me. And my son, active duty in the USAF currently of all places overseas, again I have a job to do, I have a country to serve and protect. I’m a nervous wreck, so is my wife, sorry I strayed… Read more »

Freddy
7 months ago

Your family sounds wonderful and you must be so proud. I know your nervous as any parent would be. It sounds like you taught them values and compassion towards others which will get them thru these difficult times. Thank your son for his service to our country and thank your daughters for the wonderful work they do. They will be in my thoughts and prayers. I too worry rather concerned about my son who is a Pastor in Littlestown,PA. He is taking every precaution with his congregation and to take care of himself and his wife.

Fed up neighbor
7 months ago
Reply to  Freddy

Freddy,
Thank you very much, the best to you and your family.

MikeWilliams
7 months ago

Thanks for humanizing the discussion by sharing a bit about your own life. How does one even put a price tag on a health care worker or military service in perilous times? I have no idea. It’s a lot easier to determine the value of a classroom teacher or school administrator. What I do know that Illinois doesn’t seem capable of doing what most of our neighbor states do fairly well….living within it’s means.

Fed up neighbor
7 months ago
Reply to  Mark Glennon

This has been one of the most positive group of replies I have read in a long long time.

MikeWilliams
7 months ago

Well, there isn’t much positive to say when Illinois is the subject. It’s consistent that way.

Fed up neighbor
7 months ago
Reply to  Mark Glennon

Well it looks like someone or somebody’s are against are last few reply’s. Everybody was in the positives about are comments, now everybody is in the negative column. Teachers or union people getting made at us for speaking the TRUTH ABOUT YOU

Pension lawayer
7 months ago
Reply to  Susan

You raise what I view as a moral question. The public employees have staked out a “legal” argument based on the “contract clause” as interpreted by the Illinois courts. Teachers et al. are increasingly putting forward a moralistic rationale (relating to keeping promises) to their legal argument. During the past month Fred Klonsky’s blog has had multiple posts about the morality of the teachers’ position. Fred, as many know, is an out-Socialist and admitted draft dodger and posts many columns from Italy, NYC, Southern California and other destinations popular with retired teachers. When asked about how he decides whether to… Read more »

Susan
7 months ago

Thank you for these replies.
This crisis raises a legitimate moral dilemma in a triage decision allocating scarce human resources (it takes years to replace a doctor or nurse).
America might ask whether Illinois medical professionals, a precious national resource, should be risked to extend aid and comfort to a culture of individuals (public teachers and administrators, government workers performing frivolous or self- serving functions) whose party line is ‘community can’t afford it? Too bad, f- you, pay me.’

Susan
7 months ago
Reply to  Susan

Follow up to my prior comment:
America is better served when scarce public resources are allocated to prolonging and promoting the lives of humans who say: “humble and grateful, I get it now. I really need you now in this crisis, but when the dust settles I vow to make the pot right.”

nixit
7 months ago

The morality arguments the Klonsky Krew makes regarding pensions are simply infantile. While pension spiking might be legally written into their contracts, that doesn’t mean it’s moral. And how can an unused sick day count as a day worked? The pension system lets them count 1-2 years of NOT teaching children as teaching children. Once again, all legal, but moral? I don’t think so.

Pension lawayer
7 months ago
Reply to  nixit

As big cities close their schools due to the corona virus, the major issue is how to deal with free breakfasts and lunches. As libraries close people are asking where will the homeless population spend their days if they are denied their hours on the public computers, not to mention in the well-kept bathrooms. It’s a sad commentary on our poverty alleviation mechanisms that teachers and librarians are saddled with these tasks when viruses are not in the wind. But now we learn that teachers are not equipped for remote learning even when assignments could be handed out and collected… Read more »

debtsor
7 months ago

The free breakfast and lunch is BS. Parents need to feed their children. We live in an age of abundance while food has never been cheaper.

The Truth Hurts
7 months ago
Reply to  debtsor

Sounds like CPS students will be able to pick up 3 days worth of food (at a time) from 9 to 1 starting on Tuesday. They can also have it delivered by calling 773-553-KIDS.

7 months ago

Let’s be honest, LBJ and his Great Society has made cities worse. It is time for a big correction and start over. Jobs need to come back here from China, people need to stop living off the government and get to work. Government started this mess and cannot fix it. Parents not able to feed their kids is ridiculous. I’m sure they have a $300 pair of athletic shoes though

Christo
7 months ago

The solution is actually simple and the only one that would work, yet would be unacceptable to PC communists,

To draw welfare mandatory birth control ,

Susan
7 months ago

Alaska public schools operate remotely, no problem. There are a fair amount of homeschoolers in rural Illinois also doing fine. Khan Academy offers free online modular courses with testing in all subjects by grade level (which look superior to the lesson plans in my school district.) The arguments that students cannot be taught remotely and at higher ratios-per-teacher ( than 14-1) do not hold water. If the recent cps strike were handled properly, we could have gone a month and seen how much better Khan Academy online-educated students did on standardized tests. Churches libraries and park districts (taxpayer funded) could… Read more »

James
7 months ago
Reply to  Susan

I”m with you on this one; let’s start using technology to a greater extent to deliver instruction. Its a cost saver by a good amount presumably in that the usual teacher-student ratios become greatly less relevant. There are some downsides, though, if its employed where students do it in total isolation from others of the same class in that there is likely too little interaction for the learning process and social devlopment generally. Home schooling has its place, but sometimes the students who go through it are socially stunted, relating only to their sibilngs and parental values. The world is… Read more »

Governor of Alderaan
7 months ago
Reply to  nixit

It’s moral to impose draconian taxes and bankrupt a state because a tiny rich protected class claims they’re entitled to have risk-free lives?

Governor of Alderaan
7 months ago

Whenever government cites a morality argument for doing something it means they are about to screw you but of course don’t want to say so. A morality argument means the facts are against government so they appeal to your emotions

Danni Smith
7 months ago
Reply to  Susan

gawd-when will we seize control of the people who work for us?? So simple. A grassroots movement to not pay those insane, unfair, robbing real estate taxes? Pompouspappas announced the enormous number of tax sales-57,000 homes in Crook County. Let’s see how many are sold. Then we will know what le3verage we have by not paying anymore. We all know the pensions are wrong, the 3% annual increase is immoral and number of people on pensions is due to the patronage hiring, not the need for employees. The ratio is one gub for three citizens. WHY. And why should anyone… Read more »