Illinois' brittle financial situation isn't improving, with revenues from the last three months down $340 million from the same period a year ago. A report from the General Assembly's Commission on Government Forecasting and Accountability said the situation would be even worse if it weren't for federal money coming into the state.

Illinois' brittle financial situation isn't improving, with revenues from the last three months down $340 million from the same period a year ago.

A report from the General Assembly's Commission on Government Forecasting and Accountability said the situation would be even worse if it weren't for federal money coming into the state. Take that away and the revenue drop "grows to a much more alarming $629 million," the report says.

The report, issued Friday, covers both the month of September and the first three months of the state's 2010 budget year.

Jim Muschinske, COGFA's revenue manager, said forecasters expected revenues to be off in the first three months of this budget year compared to last. But they weren't prepared for the magnitude of the drops, which Muschinske wrote in the report "are somewhat unsettling and serve as a reminder that despite being in a recovery phase, revenues should not be expected to abruptly improve."

Personal income tax receipts dropped $278 million in the first three months over last year. Muschinske said the state budget assumed they would drop, but not by that much. Returns are expected to improve a bit later in the year, but it is uncertain they will ever hit the initial estimates used to craft the budget.

"The fact they are down that far raises some concern we won't hit that number," Muschinske said.

Sales taxes are down $244 million, significantly worse than expected. However, Muschinske said that there is still hope sales taxes can rebound and come close to estimates through the rest of the year.

The only tax to see any decent gain was liquor taxes, which showed a $13 million increase over the same period a year ago. However, Muschinske said that is likely because people stocked up on alcohol before state liquor taxes increased in September. If that is the case, it is just as likely there will be a drop in those tax receipts in coming weeks.

The revenue numbers will be closely watched by lawmakers and Gov. Pat Quinn's administration. If they continue to be worse than projected, more budget cutting may be necessary or it may take the state even longer to pay its bills.

Quinn's office said it had no immediate comment on the COGFA report.

Another section of the COGFA report discusses evidence that the recession is over and that the economy is in recovery. Even if that is the case, though, Illinois's finances will not improve quickly. Muschinske cited evidence from previous recessions that Illinois revenues take months to recover after experts determine that a recession has ended.

"Don't look for some magic bullet," he said. "It will take some time."

Doug Finke can be reached at (217) 788-1527 or doug.finke@sj-r.com.