The latest Illinois revenue projections won’t make it easier for the denizens of the State Capitol to agree on a budget.

CHICAGO – Illinois' latest tax revenue projections add another degree of difficulty to its already intractable budget deadlock.

Revenues this year are expected to fall $442 million short of projections and are expected to climb only $215 million next year, according to the report from the legislature's non-partisan forecasting commission.

The state expects $31.9 billion of general fund revenues in fiscal 2017 based on current tax rates, up little from the $31.7 billion now expected in the current fiscal year that runs through June 30.

"That sub-par growth reflects continued weakness in jobs, wages, and the increased likelihood of recessionary pressures," said Jim Muschinske, revenue manager at the Commission on Government Forecasting and Accountability.

Projections for the next fiscal year and the update for fiscal 2016 were laid out by the commission in a report that comes with the General Assembly's Democratic majorities and GOP Gov. Bruce Rauner still locked in a stalemate over the budget for fiscal 2016, which began more than eight months ago.

The fresh numbers underscore the state's difficulty in climbing out of its budget hole, currently estimated at about $6 billion, without deep cuts and tax increases. Democrats want a mix, but Rauner won't support tax increases unless Democrats get behind at least some of his governance and policy reforms, including tort and redistricting reforms, worker's compensation changes, and local government curbs on union powers.

Rauner says they are needed to structurally repair the state's economy and balance sheet but opponents have labeled them as being anti-union and detrimental to the middle class. The state continues to spend at fiscal 2015 levels under continuing appropriations and court orders which are projected to push the state's bill backlog up to $10 billion by June 30.

Personal income tax revenue is estimated to grow by about 2%, corporate income taxes are expected to grow just 1.5%, and sales tax are forecast to grow 1.9% in the next fiscal year. The three are the state's biggest sources of revenue.

The state's deficit has spiraled amid the gridlock in Springfield that has left the state's leadership unable to respond to the revenue loss from the partial expiration on Jan. 1, 2015 of a 2011 hike in personal and corporate tax rates.

The commission's tax projections are roughly on par with numbers Rauner outlined in the fiscal 2017 budget he unveiled in February.

The two projections split in overall revenues available in the coming year, due to what the commission sees as $925 million in uncertain revenue from various sources that Rauner anticipates.

"It's just a matter of certainty whether they will or will not occur," Muschinske told lawmakers at a committee hearing Tuesday.

COGFA labels $500 million in federal funds primarily from Medicare reimbursements, $275 million from the state's budget reserve, and proceeds from the sale of the state building in downtown Chicago as questionable.

The reserve use would require legislative approval, COGFA believes the building sale proceeds might not arrive in fiscal 2017, and believes the federal funds are reliant on an outdated federal reimbursement methodology.

The fiscal 2016 downward revision reflects flat sales tax growth and poorer-than-expected corporate profits while personal income taxes are on par with previous estimates. Federal funding also could slip as the state benefitted in fiscal 2015 from an infusion of matching funds after it swept $1.3 billion from various non-general fund accounts.

State economist Edward Boss Jr. painted a picture of the state's slow economic recovery, with unemployment that has lagged the nation's improvement and a pessimistic view of the economy going forward.

The state relies on Moody's Analytics and Economic & Consumer Credit Analytics for its economic outlook and Democrats sought to highlight comments in those independent reports that suggest it is the state's shaky state government finances and budget woes that tarnish its long-term outlook.

The comments "run counter to the political narrative," said Rep. Elaine Nekritz, D-Northbrook. Rauner has billed his turnaround agenda items as needed to improve the state's finances while Democrats argue the budget is the number one issue holding back the state and should be tackled alone.

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