Newspaper article Evansville Courier & Press (2007-Current)

Recession Worst 'Cliff' Outcome ; Illinois May Lose $1 Billion from U.S

Newspaper article Evansville Courier & Press (2007-Current)

Recession Worst 'Cliff' Outcome ; Illinois May Lose $1 Billion from U.S

Article excerpt

SPRINGFIELD, Ill. - Government experts who run the numbers estimate Illinois could lose $1 billion in federal revenue if President Barack Obama and Congress cannot reach a budget agreement and allow the economy to plunge off the so-called "fiscal cliff." But more unpredictable - and perhaps more worrisome - is what impact another recession, spurred by the possible federal free fall, would have on Illinois. The state could lose an additional $1 billion because of sagging tax revenue beginning next month and running through at least mid-2014.

States are monitoring the faceoff between Democrat Obama and House Speaker John Boehner, an Ohio Republican, who are trying to reach a budget deal to avoid automatic tax increases and nearly across-the-board spending cuts that would take effect Jan. 1, a deadline set last year when the two sides reached a federal debt- ceiling pact.

"We watch that every day from Washington," Illinois Gov. Pat Quinn said last week.

Many states are worried about how to plan budgets for the coming year, based on the uncertainty. But Quinn's office won't discuss the potential fallout.

The state had enough problems to begin with. Officials predict several state agencies' programs and services won't make it through the budget year without additional money. There's also the $9 billion backlog of bills owed to vendors and a worst-in-the-nation pension program deficit, a fix for which Quinn calls his top priority.

Nonetheless, the Democratic governor has "full confidence" in Obama to broker a deal.

The national consequences are clear: Federal income taxes would increase by ending cuts implemented during President George W. Bush's administration. There would be broad-based cuts to most federal agencies, including defense spending.

Should the cuts go into effect, Illinois would lose $305 million in federal grants for education, public housing and nutrition programs for low-income women and children next year, according to Michael Bird, a Washington, D. …

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