SPRINGFIELD – Tax increases designed to ease Illinois’ budget woes are showing mixed results nearly halfway through the fiscal year, state numbers show.
A hefty 40-cent increase on each pack of cigarettes sold is lagging far behind the state’s projections.
And while increased taxes from riverboat casinos are bountiful now, that money could fall short by next June, too.
Lawmakers approved both tax hikes in the spring to help fill a budget hole expected to be nearly $2 billion in the fiscal year that started July 1.
They expected to raise $230 million – or about $19 million a month – in extra revenue by pushing taxes on cigarette sales up to 98 cents per pack. They also budgeted an extra $135 million from hiked riverboat casino taxes.
But from July 1 through November 30, cigarette taxes were bringing in only about $12.5 million extra per month. Averaged out over the rest of the year, the state would collect about $150 million in new money – or about $80 million less than expected.
Department of Revenue spokesman Mike Klemens said it’s far too soon to predict the state will see such a shortfall.
Klemens said revenue is behind largely because retailers stocked up on cigarette tax stamps in June, before the tax hike took effect.
Revenue numbers from the state Comptroller’s office indicate a large increase in collections in July – when most of the taxes were paid on the June stamp purchases – before leveling off in August and September.
The numbers have since climbed, with last month posting a 42 percent increase from November 2001. Klemens said officials expect the revenues will continue to grow, but they cannot predict how much.
“I thought they would increase before now,” Klemens said. “These are not great numbers.”
Anti-smoking groups such as the American Lung Association of Illinois say they cannot tell whether tax receipts are down because more people have dropped the habit.
But they do say they’re strapped for cash to help people trying to quit. Their anti-tobacco money was slashed from $74 million to $12 million, and they’ve seen very little of that because it’s been tied up in litigation.
“They raised the tax but there’s no services to help people quit,” said Kathy Drea, a spokeswoman for the Lung Association.
Meanwhile, the extra gambling taxes are rolling in better than expected. At its current pace, the state would collect nearly $200 million more than last year – or $65 million more than it projected.
But that will change Jan. 1, when all boats return to paying a much smaller percent of their Keluaran Hk casino proceeds to the state under a graduated tax system.
The taxes will increase as the boats make more money, but that might be more challenging in 2003, said Tom Swoik, executive director of the Illinois Casino Gaming Association representing the nine riverboat operators.
The Illinois Gaming Board reports casino proceeds are down statewide compared to last year and have shown slight declines for each of the last few months.
Swoik said fewer people are going to the boats, largely because of new dockside competition in Indiana for the profitable boats in the Chicago suburbs.
The decline could mean the taxes don’t reach budget projections by next June, he said.
“How far it will go, we don’t know,” Swoik said. “We’re hoping that there will be some recovery.”