TRANSMITTAL LETTER FOR BOARD MEETING OF JULY 14, 2022
COMMITTEE ON BUDGET AND EMPLOYMENT
Mr. Brian A. Perkovich, Executive Director
Title
Report on Budgetary Revenues and Expenditures for the second quarter of 2022, ended June 30, 2022
Body
Dear Sir:
Attached is a report of revenues and expenditures for the second quarter of 2022, ended June 30, 2022. This report is prepared on an unaudited budgetary basis of accounting.
The 2022 year-to-date Corporate Fund actual net tax revenue of $212.3 million is 76.2 percent of the budgeted tax receivable and is $55.0 million over the collections for the same period in 2021. Year-to-date allocations to the Personal Property Replacement Tax (PPRT) totaled $65.2 million which reflects continued statewide over-performance. Corporate Fund actual non-tax revenue of $44.8 million is $12.2 million under the collections for the same period in 2021. The negative variance is driven by the timing of TIF surplus distributions, most of which occurred early in the calendar year in 2021, and $4.2 million less in user charge collections compared to the same period in 2021. Major components of non-tax revenue include the following: user charge income of $20.1 million, rental and easement income of $11.8 million, and TIF surplus distributions of $9.2 million.
The 2022 year-to-date expenditures of $162.3 million are 37.0 percent of the $438.5 million Corporate Fund budget and are $4.8 million over the expenditures for the same period in 2021. Energy and healthcare costs, two of the primary expenditure drivers, are monitored closely throughout the year. Energy expenditures (electricity and natural gas) in 2022 are 43.4 percent higher than the same period in 2021.The increase in energy prices was expected and is primarily due to increased prices. Healthcare costs are 18.9 percent higher than the same period in 2021. These increases were expected as health plan claims return to more normal levels post-pandemic.
The two primary economic factors driving District revenues are the real estate market and the Consumer Price Index (CPI). Through May 2022, the Illinois Association of Realtors reports that Chicago metropolitan area home sales are down 7.4 percent, while the median sales price has increased 5.1 percent compared to the same period in 2021. Home sales have decreased due to the Federal Reserve increasing its benchmark interest rate by 0.75 percent, the biggest increase since 1994.
According to the Bureau of Labor Statistics, for the 12 months ending in May, CPI increased 8.6 percent before seasonal adjustment. This is the largest 12-month increase since the period ending December 1981. The energy index rose 34.6 percent over the last year, the largest 12-month increase since the period ending September 2005. The food index increased 10.1 percent for the 12 months ending in May, the first increase of 10.0 percent or more since the period ending March 1981.
According to Bloomberg News, rent of primary residences climbed 5.2 percent from a year earlier, the most since 1987. While the job market remains a bright spot, decades-high inflation is crippling confidence among the American people and largely outpacing wage gains. Inflation-adjusted average hourly earnings fell 3.0 percent in May from a year earlier, the biggest drop since April 2021 and the 14th straight decline.
The Budget Office continues to analyze monthly expenditures, particularly in the commodity classes, and will closely monitor economic conditions, revenues, and expenditures throughout the remainder of 2022.
Respectfully Submitted, Shellie A. Riedle, Administrative Services Officer
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