14 Past Report Corrections

We would like to draw attention to a methodological change that occurred in the data aggregation process when calculating the Fiscal Gap. The following reports had fiscal gaps reported that were larger than they would have been if using the methodology used when calculating the FY2023 fiscal gap.

Merriman, David F. & Xiaoyan Hu, (2021). “Illinois’ Fiscal Challenges: Where are we now and how do we proceed? April 22, 2021 for Fiscal Year 2020
- The fiscal gap was reported as $4.4 billion deficit and should have been a $1.0 billion deficit.
Choi, Francis, Alea Wilbur-Mujtaba & David Merriman (2023). “Assessing Illinois’ Fiscal Future After an Influx of Federal Funds” for Fiscal Year 2021
- The fiscal gap was reported as $1 billion deficit and should have been reported as a $2.3 billion surplus (when including state CURE revenue)
Wilbur-Mujtaba, Alea, Francis Choi & David Merriman (2023). “Recovering from a COVID (Spending) Fever” for Fiscal Year 2022
- Fiscal gap was reported as $11.2 billion and should have been $16 billion (when including state CURE revenue)

(a) Fiscal Gap for each Fiscal Year ($ Millions of Nominal Dollars)

Fiscal Year	Expenditures	Revenue	Fiscal Gap
1998	31218	31265	46
1999	33805	33030	-775
2000	37283	35846	-1437
2001	40300	37148	-3153
2002	42014	36826	-5188
2003	42567	36806	-5761
2004	52980	40856	-12124
2005	45331	42866	-2465
2006	48028	44701	-3328
2007	51099	48033	-3065
2008	54139	50213	-3925
2009	56721	49859	-6862
2010	59248	49839	-9409
2011	60404	54732	-5672
2012	59831	56248	-3583
2013	63261	60804	-2457
2014	66942	62772	-4169
2015	69921	64114	-5807
2016	63909	61986	-1924
2017	71705	61349	-10356
2018	74943	70465	-4477
2019	74384	72153	-2231
2020	81574	78142	-3433
2021	92807	91806	-1001
2022	99786	113029	13243
2023	110575	108086	-2489

14.1 Yearly Change Tables

(b) Yearly Change in Expenditures

EXPENDITURE CATEGORY	FY 2023 ($ BILLIONS)	FY 2022 ($ BILLIONS)	1-YEAR CHANGE	25-YEAR CAGR
Medicaid	32.4	28.7	13.1%	7.4%
K-12 Education	14.7	13.4	9.9%	4.3%
Local Govt Revenue Sharing	10.9	10.3	5.4%	4.7%
Human Services	8.8	7.3	21.3%	3.3%
State Pension Contribution	6.8	6.5	5.1%	10.5%
Transportation	5.0	4.3	16.3%	3.8%
State Employee Healthcare	3.0	3.0	-0.1%	5.8%
University Education	2.5	2.3	12.5%	0.8%
Debt Service	2.0	2.0	-2.9%	5.7%
Revenue	2.0	1.8	8.0%	6.4%
Tollway	1.9	2.1	-9.9%	6.8%
Corrections	1.7	1.5	13.5%	2.2%
Public Safety	1.7	1.7	1.2%	5.7%
Children & Family Services	1.6	1.3	26.0%	0.8%
Community Development	1.5	1.4	7.7%	4.8%
All Other Expenditures **	14.0	12.2	14.4%	5.7%
Total Expenditures	110.6	99.8	10.8%	5.2%

REVENUE CATEGORY	FY 2023 ($ BILLIONS)	FY 2022 ($ BILLIONS)	1-YEAR CHANGE	25-YEAR CHANGE
Income Tax	22.1	23.8	-7.3%	5.1%
Federal Medicaid Reimbursements	20.2	19.0	6.1%	7.5%
Sales Tax	16.2	15.4	4.8%	3.3%
Federal Other	10.9	19.4	-43.9%	4.3%
Corporate Income Tax	10.1	9.7	4.3%	7.6%
Medical Provider Assessments	4.1	3.7	9.5%	8.4%
Receipts from Revenue Producing	2.6	2.4	8.5%	5.2%
Motor Fuel Taxes	2.5	2.5	1.5%	2.7%
Federal Transportation	2.1	1.8	15.3%	3.8%
Licenses, Fees, Registration	2.1	1.9	9.2%	7.9%
All Other Sources **	15.2	13.3	14.4%	4.3%
Total Revenue	108.1	113.0	-4.4%	5.1%

The Fiscal Gap was reported to be larger than it was due to excluding fund 0278 (Income Tax Refund Fund) and manually subtracting Tax Refunds from the Income and Corporate Tax Revenue. This resulted in an extra $2+ Billion being subtracted from the revenue side and an increased fiscal gap.

14.1.1 Other comments on past reports:

In the FY2013 to FY2014 reports, the fiscal gap changed by over $4 billion in the 2010 calculations alone (the FY2013 report had around $12 billion gap and then FY14 report had around $8 billion for the fiscal gap).

FY20 vs FY23 reports:

Output created for the FY20 report had $3.622 billion for Debt Service, whereas the value is 1.947 billion using the FY23 methodology. State Pension calculations also had $3 or $4 billion changes in aggregate expenditures (9.2 vs 5.3 billion) each year.

There have been other minor changes in how the fiscal gap is calculated over the years. For example, various methodology documents referenced including the debt principal and interest. Some expenditure categories created by the past researchers included certain items in some years, and excluded them in others. This is partly due to changes in how the research was conducted (Excel tables, Stata, and then R) and due to changing ideology of what should or should not be considered as a reoccuring revenue source or expense. Most revenue and expenditure categories have remained consistent, with nearly identical totals when calculated by various researchers over the years, but some categories have varied in totals and calculation methods.

These differences impacted the overall Fiscal Gap calculated in previous reports:

Debt Service (Over estimated in some years due to counting Principal & Interest instead of just Interest as a cost of debt)
Pensions (over estimated due to including object 4430 for retirement benefits paid to employees instead of object 4431 for state payments into the pension fund)
Employee Healthcare (over estimated? - I think this was almost a mistake in FY21 and FY22 papers but then it was caught before being published - somewhere there is a printed excel sheet of healthcare expenditures that is highlighted, find it and double check.)
Individual Income Tax Revenue (under estimated from refund fund subtraction)

# Past Report Corrections {#sec-reportmistakes-past} We would like to draw attention to a methodological change that occurred in the data aggregation process when calculating the Fiscal Gap. The following reports had fiscal gaps reported that were larger than they would have been if using the methodology used when calculating the FY2023 fiscal gap. - Merriman, David F. & Xiaoyan Hu, (2021). "Illinois' Fiscal Challenges: Where are we now and how do we proceed? April 22, 2021 for Fiscal Year 2020 - The fiscal gap was reported as \$4.4 billion deficit and should have been a \$1.0 billion deficit. - Choi, Francis, Alea Wilbur-Mujtaba & David Merriman (2023). "Assessing Illinois' Fiscal Future After an Influx of Federal Funds" for Fiscal Year 2021 - The fiscal gap was reported as \$1 billion deficit and should have been reported as a \$2.3 billion surplus (when including state CURE revenue) - Wilbur-Mujtaba, Alea, Francis Choi & David Merriman (2023). "Recovering from a COVID (Spending) Fever" for Fiscal Year 2022 - Fiscal gap was reported as \$11.2 billion and should have been \$16 billion (when including state CURE revenue) ::: {style="width: 70%"} $a$ Fiscal Gap for each Fiscal Year (\$ Millions of Nominal Dollars) | Fiscal Year | Expenditures | Revenue | Fiscal Gap | |:------------|-------------:|--------:|-----------:| | 1998 | 31218 | 31265 | 46 | | 1999 | 33805 | 33030 | -775 | | 2000 | 37283 | 35846 | -1437 | | 2001 | 40300 | 37148 | -3153 | | 2002 | 42014 | 36826 | -5188 | | 2003 | 42567 | 36806 | -5761 | | 2004 | 52980 | 40856 | -12124 | | 2005 | 45331 | 42866 | -2465 | | 2006 | 48028 | 44701 | -3328 | | 2007 | 51099 | 48033 | -3065 | | 2008 | 54139 | 50213 | -3925 | | 2009 | 56721 | 49859 | -6862 | | 2010 | 59248 | 49839 | -9409 | | 2011 | 60404 | 54732 | -5672 | | 2012 | 59831 | 56248 | -3583 | | 2013 | 63261 | 60804 | -2457 | | 2014 | 66942 | 62772 | -4169 | | 2015 | 69921 | 64114 | -5807 | | 2016 | 63909 | 61986 | -1924 | | 2017 | 71705 | 61349 | -10356 | | 2018 | 74943 | 70465 | -4477 | | 2019 | 74384 | 72153 | -2231 | | 2020 | 81574 | 78142 | -3433 | | 2021 | 92807 | 91806 | -1001 | | 2022 | 99786 | 113029 | 13243 | | 2023 | 110575 | 108086 | -2489 | ::: ## Yearly Change Tables :::{#tbl-panel layout-ncol=2} <div> $b$ Yearly Change in Expenditures | EXPENDITURE CATEGORY | FY 2023 (\$ BILLIONS) | FY 2022 (\$ BILLIONS) | 1-YEAR CHANGE | 25-YEAR CAGR | |:--------------|--------------:|--------------:|--------------:|--------------:| | Medicaid | 32.4 | 28.7 | 13.1% | 7.4% | | K-12 Education | 14.7 | 13.4 | 9.9% | 4.3% | | Local Govt Revenue Sharing | 10.9 | 10.3 | 5.4% | 4.7% | | Human Services | 8.8 | 7.3 | 21.3% | 3.3% | | State Pension Contribution | 6.8 | 6.5 | 5.1% | 10.5% | | Transportation | 5.0 | 4.3 | 16.3% | 3.8% | | State Employee Healthcare | 3.0 | 3.0 | -0.1% | 5.8% | | University Education | 2.5 | 2.3 | 12.5% | 0.8% | | Debt Service | 2.0 | 2.0 | -2.9% | 5.7% | | Revenue | 2.0 | 1.8 | 8.0% | 6.4% | | Tollway | 1.9 | 2.1 | -9.9% | 6.8% | | Corrections | 1.7 | 1.5 | 13.5% | 2.2% | | Public Safety | 1.7 | 1.7 | 1.2% | 5.7% | | Children & Family Services | 1.6 | 1.3 | 26.0% | 0.8% | | Community Development | 1.5 | 1.4 | 7.7% | 4.8% | | All Other Expenditures \*\* | 14.0 | 12.2 | 14.4% | 5.7% | | **Total Expenditures** | **110.6** | **99.8** | **10.8%** | **5.2%** | </div> ::: {style="width: 50%"} <div> $c$ Yearly Change in Revenue Sources | REVENUE CATEGORY | FY 2023 (\$ BILLIONS) | FY 2022 (\$ BILLIONS) | 1-YEAR CHANGE | 25-YEAR CHANGE | |:--------------|--------------:|--------------:|--------------:|--------------:| | Income Tax | 22.1 | 23.8 | -7.3% | 5.1% | | Federal Medicaid Reimbursements | 20.2 | 19.0 | 6.1% | 7.5% | | Sales Tax | 16.2 | 15.4 | 4.8% | 3.3% | | Federal Other | 10.9 | 19.4 | -43.9% | 4.3% | | Corporate Income Tax | 10.1 | 9.7 | 4.3% | 7.6% | | Medical Provider Assessments | 4.1 | 3.7 | 9.5% | 8.4% | | Receipts from Revenue Producing | 2.6 | 2.4 | 8.5% | 5.2% | | Motor Fuel Taxes | 2.5 | 2.5 | 1.5% | 2.7% | | Federal Transportation | 2.1 | 1.8 | 15.3% | 3.8% | | Licenses, Fees, Registration | 2.1 | 1.9 | 9.2% | 7.9% | | All Other Sources \*\* | 15.2 | 13.3 | 14.4% | 4.3% | | **Total Revenue** | **108.1** | **113.0** | **-4.4%** | **5.1%** | The Fiscal Gap was reported to be larger than it was due to excluding fund 0278 (Income Tax Refund Fund) and manually subtracting Tax Refunds from the Income and Corporate Tax Revenue. This resulted in an extra \$2+ Billion being subtracted from the revenue side and an increased fiscal gap. </div> ::: ::: ### **Other comments on past reports:** In the FY2013 to FY2014 reports, the fiscal gap changed by over \$4 billion in the 2010 calculations alone (the FY2013 report had around \$12 billion gap and then FY14 report had around \$8 billion for the fiscal gap). FY20 vs FY23 reports: Output created for the FY20 report had \$3.622 billion for Debt Service, whereas the value is 1.947 billion using the FY23 methodology. State Pension calculations also had \$3 or \$4 billion changes in aggregate expenditures (9.2 vs 5.3 billion) each year. ![](images/clipboard-908681149.png){width="279"} There have been other minor changes in how the fiscal gap is calculated over the years. For example, various methodology documents referenced including the debt principal and interest. Some expenditure categories created by the past researchers included certain items in some years, and excluded them in others. This is partly due to changes in how the research was conducted (Excel tables, Stata, and then R) and due to changing ideology of what should or should not be considered as a reoccuring revenue source or expense. Most revenue and expenditure categories have remained consistent, with nearly identical totals when calculated by various researchers over the years, but some categories have varied in totals and calculation methods. These differences impacted the overall Fiscal Gap calculated in previous reports: - Debt Service (Over estimated in some years due to counting Principal & Interest instead of just Interest as a cost of debt) - Pensions (over estimated due to including object 4430 for retirement benefits paid to employees instead of object 4431 for state payments into the pension fund) - Employee Healthcare (over estimated? - I think this was almost a mistake in FY21 and FY22 papers but then it was caught before being published - somewhere there is a printed excel sheet of healthcare expenditures that is highlighted, find it and double check.) - Individual Income Tax Revenue (under estimated from refund fund subtraction)