Report: Fewer Illinois taxpayers expected to strain state finances | Illinois

(The Center Square) – Illinois’ shrinking population could eventually lead to a weakened economic outlook, a new study suggests.

According to Pew Charitable Trusts, one-third of all states lost population in 2021. Of the 17 states where population declined during the year, losses were greatest in New York (-1.58 %) and in Illinois (-0.89%).

The rate of population growth nationwide was five times slower in 2021 than in the previous 10-year period. The population of 17 states fell last year, including Illinois, Mississippi and West Virginia, the same three states that lost residents in the 2010-20 decade.

Pew researcher Joanna Biernacka-Liievestro said a declining or slowly growing population can be both a cause and an effect of weakened economic prospects.

The report noted that states experiencing long-term population decline, such as Illinois, all fell near the bottom of economic growth during the 12-year recovery from the Great Recession.

“More residents generally means more workers and consumers who contribute to economic activity by taking jobs and buying goods and services, which, in turn, generates more tax revenue. The reverse is generally true for states with shrinking populations,” according to the report.

In Illinois, most people leaving the state are downstate residents. But while Chicago and the suburbs have seen smaller population declines, they still rank 46th out of the nation’s 50 largest metro areas in terms of growth.

Last year, Governor JB Pritzker blamed the population loss on unaffordable tuition fees.

“I looked very closely at the number of people, who they are, where they come from, why they leave, and what you see when you look at emigration is, in fact, most of the population who were leaving were young people who were choosing to go to college out of state because they couldn’t afford to go to college in Illinois,” Pritzker said.

Even with fewer residents, Illinois’ annual budget that begins July 1 spends the most in state history and boosts higher education spending to $2.2 billion from $1.9 billion. billion dollars for the current fiscal year.

Biernacka-Liievestro adds that once federal pandemic dollars dry up, Illinois could face fiscal challenges.

“Fewer people can generally lead to less economic activity and reduced tax bases, which can, in turn, limit state revenue collection,” Biernacka-Lievestro said.

The report adds that the state government plays a pivotal role in determining whether a state’s finances can go south.

“Population is just one factor that underpins state finances, which are also shaped by political decisions about tax collection and spending as well as factors outside a state’s borders and to the control of legislators, such as commodity prices,” the report said.

The South and West were home to the fastest growing states. In 2021 alone, Idaho grew just 3%, adding 53,000 people, and Utah’s population grew 1.72%.

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