TRANSMITTAL LETTER FOR BOARD MEETING OF SEPTEMBER 2, 2021
COMMITTEE ON BUDGET AND EMPLOYMENT
Mr. Brian A. Perkovich, Executive Director
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Report on Budgetary Revenues and Expenditures for the second quarter of 2021, ended June 30, 2021
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Dear Sir:
Attached is a report of revenues and expenditures for the second quarter of 2021, ended June 30, 2021. This report is prepared on an unaudited budgetary basis of accounting.
The actual second quarter 2021 Corporate Fund net tax revenue of $157.3 million is 56.7 percent of the budgeted revenues and is $23.8 million above the collections for the same period in 2020. PPRT allocations to the Corporate Fund totaled $18.2 million during the second quarter, $13.4 million more than the same period in 2020. Actual Corporate Fund non-tax revenue for 2021 includes the following: user charge income of $24.4 million, TIF surplus distributions of $17.2 million, and rental and easement income of $11.8 million, which we will continue to monitor closely as the economy continues to recover.
The 2021 second quarter expenditures of $157.5 million are 39.4 percent of the $399.3 million Corporate Fund budget. Year-end expenditures are expected to be near $354 million, or 89 percent of the budgeted appropriation and flat to 2020 expenditures. Healthcare costs to date are 4.8 percent higher than the same period in 2020. With the effects of the global pandemic moderating in the second quarter, we are experiencing a rebound in demand for healthcare services. This trend is expected to continue as the environment normalizes and plan participants begin to schedule health care services that had been deferred during the pandemic.
The two primary economic factors driving the District’s revenues are the Consumer Price Index (CPI) and the real estate market. The Illinois Association of Realtors reports that Chicago metropolitan area home sales are up 39.5 percent through June 2021, while the median sales price has increased 16.3 percent in the same period.
Over the last 12 months, CPI increased 5.4 percent before seasonal adjustment; this was the largest 12-month increase since a 5.4 percent increase for the period ending August 2008. The index for used cars and trucks increased 10.5 percent, the food index increased 0.8 percent, and the energy index increased 1.5 percent. Household spending on merchandise, fueled in part by government stimulus, has left businesses scrambling to fill orders while facing shortages of materials and labor. This is contributing to higher costs, which often feed through to consumer prices. Meanwhile, the lifting of pandemic restrictions is propelling purchases of services like travel and transportation, another contributor to inflationary pressures. Federal Reserve policy makers believe recent price increases are the result of transitory reopening effects, though more recently acknowledged the possibility of longer-term inflationary pressures. Sustained constraints in the production pipeline raise the risk of an acceleration in consumer inflation. Economists have been watching to see whether price pressures broaden out to categories other than those that are just now rebounding after pandemic-related lockdowns. While CPI growth is favorable for 2022 District revenues, supply cost increases continue to impact cost estimates, particularly for capital construction projects.
Respectfully Submitted, Shellie A.Riedle, Acting Administrative Services Officer, SAR
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