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Finding the Balance: State Fiscal Sustainability and Local Government Fiscal Challenges

Finding the Balance: State Fiscal Sustainability and Local Government Fiscal Challenges

The end of Illinois’ 2023 fiscal year marked the completion of the first year after which the state government fully allocated the State and Local Fiscal Recovery Funds (SLFRF) from the COVID pandemic. In previous reports (see Wilbur-Mujtaba et. al. 2023 and past reports at https://igpa.uillinois.edu/tag/fiscal-futures), our team at the Fiscal Futures Project has cautioned that Illinois’s fiscal situation remains challenging amidst the end of pandemic federal relief funds, and that lawmakers must continue to monitor spending closely to assure alignment with revenue. In this report, we provide an update on Illinois’s current fiscal situation by examining state governmental revenue and expenditures during FY2023. In addition, we outline the major fiscal challenges of Illinois’ local governments, from mass transit issues to changes in the commercial property market and property tax burdens. After reviewing the issues across Illinois’s local governments, we conclude with implications for state government finance in Illinois.

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“The ultimate effect will depend upon the extent to which good uses are found for commercial office space and the degree to which property tax burdens can be shifted toward owners of other types of real estate,” said David Merriman, a co-author of the Policy Spotlight and IGPA interim director.

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