CHICAGO -- Illinois is facing a $298 million revenue shortfall in its general fund budget for fiscal 1992, according to a financial forecast released this week by the state General Assembly's Economic and Fiscal Commission.

The bipartisan commission's forecast showed general fund revenues totalling $14.4 billion on June 30, the end of fiscal 1992 -- $298 million less than the Bureau of the Budget's latest estimate of $14.7 billion, mainly due to lower-than-expected sales and corporate income taxes and a projected $169 million dropoff in federal funding.

"While many economists believe the economy bottomed out in the country and in the state and is on the way up, we are seeing an economy that is at least remaining stagnant, and we are seeing a slow and perhaps no-growth economy for the next quarter or two," said William Hall, the commission's executive director.

He added that while the Christmas season could turn the state's financial picture around, the commission was "not hopeful that will happen."

The forecast indicated that so far this fiscal year corporate income tax receipts have declined 9.7% from last year, while personal income taxes grew only 5.9% and sales taxes increased "a disappointing" 1.7%.

The commission projected that to reach its $14.4 billion general fund forecast, state revenues from taxes and transfers would have to grow 10.3% over the remainder of fiscal 1992, compared with the 8.7% growth rate they registered so far this year. To meet the Bureau of the Budget's $14.7 billion estimate, revenues would have to grow 13.5% over the rest of the year, the report states.

Mr. Hall explained that because revenues were growing at a slower rate "than any of us expected," the state could be facing a yearend cash balance lower than the $200 million balance allowed for in the budget passed by the General Assembly in July.

Other options for the state -- in addition to dipping into that balance -- would be to be make further budget cuts, do more short-term borrowing, or raise taxes, he said, adding that raising taxes would be an "unlikely" option.

Ellen Feldhausen, a spokeswoman for the Bureau of the Budget, said that while the administration of Gov. Jim Edgar was "slightly more optimistic" in its September estimates than the commission, the commission's forecast "underscores what the governor has been saying all along, that this is going to be a difficult year."

According to Mike Lawrence, the governor's spokesman, Gov. Edgar has already ordered state agencies to prepare for possible cuts in spending.

Ms. Feldhausen pointed out the administration still believed the state would collect the $169 million in federal aid that the commission eliminated from its forecast.

Mr. Hall said the commission did not think state human service agencies would be able to certify new clients for federal Medicaid mathcing funds as quickly as the state believers it can.

As for the options outlined by Mr. Hall, Ms. Feldhausen said the governor considered the $200 million yearend balance "a major goal of this budget," and would not support a tax increase. She said short-term borrowing was an option if the state could identify a revenue source to pay off the debt by the end of the fiscal year. The state did a $185 million general obligation short-term certificate borrowing in August.

"We hope [the commission's forecast] encourages the legislature to help the governor cut spending by not overriding his vetoes and passing programs Illinois does not have money for," she said.

The General Assembly currently is meeting in its fall session to consider possible overrides of vetoes. Mr. Hall said he has presented the commission's forecast to the legislature, which uses the information in its budget negotiations.

The state has a deteriorating financial position caused by overspending during the past two fiscal years. This was cited by Standard & Poor's Corp. when it downgraded $4.2 billion of the state's GO debt to AA from AA-plus in August. It also was noted by Moody's Investors Service when it lowered its rating on $4.3 billion of GO debt to Aal from Aaa in September.

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