Pritzker signs final first-term budget
Gov. JB Pritzker signed his final first-term budget into law Tuesday, an about $46 billion spending plan buoyed by pandemic-driven revenue windfalls and a current-year surplus that helped the state pay down debts and offer temporary tax relief.
Between the three budget-related bills signed Tuesday – House Bill 900, House Bill 4700 and Senate Bill 157 – as well as a supplemental appropriations bill Pritzker signed last month – Senate Bill 2803 – the plan includes $500 million beyond statutory requirements to the state’s beleaguered pension funds; $1 billion to the state’s “rainy day” fund which currently has a balance of just $27 million; and an estimated $1.8 billion in tax relief, much of which is temporary.
At a signing event at Chicago State University, Pritzker touted the spending plan as proof of his fiscal leadership as he seeks a second term, contrasting the three-plus years under his leadership with that of his Republican predecessor, Bruce Rauner.
“Do you remember just five years ago when our state was held hostage by the former governor and the majority of the Republican Party?” Pritzker asked rhetorically. “Violence interruption programs were destroyed. DCFS shut down 500 residential beds for our state’s most vulnerable children. The developmentally disabled were forgotten.
Our state’s unpaid backlog of bills piled up to nearly $17 billion and our state suffered eight credit downgrades while sending five of our universities into junk credit status.”
Rauner presided over a 736-day budget impasse in which he and Democrats in the General Assembly failed to bridge ideological gaps to pass a state budget. During that period, court-mandated spending continued at a pace that was billions of dollars more than available revenues, due in large part to the rollback of a temporary tax hike that occurred just before Rauner took office.
Pritzker beat Rauner by 16 percentage points in the 2018 election, and he and Democrats have highlighted the impasse and played up the differences between the two administrations throughout Pritzker’s first term in an effort to claim the mantle of the party of fiscal responsibility in Illinois.
It’s a contrast that Pritzker’s campaign has highlighted in TV advertising, noting that the state has seen credit upgrades from two ratings agencies since he took office and paid down the bill backlog to a regular 30-day billing cycle.
That’s on top of a March debt retirement plan that saw the state dedicate $898 million to pay down old health insurance bills that were collecting interest and $230 million to fully fund the state’s College Illinois program.
The budget also includes $1.8 billion in tax relief, including a one-year suspension on the state’s grocery tax ($400 million), A one-time 5% property tax rebate up to $300 per household ($520 million), and a 10-day sales tax holiday for back-to-school items and clothing from Aug. 5-14 ($50 million).
An additional $685 million would fund one-time direct rebate checks at $50 per individual and $100 per dependent, up to three, for individuals earning $200,000 or less or joint filers earning $400,000 or less.
While that relief was temporary, the budget also permanently increased the earned income tax credit from 18% to 20% of the federal credit while expanding the program to noncitizens who have an individual taxpayer identification number rather than a Social Security number. That program would cost about $100 million.
The state’s statutory annual motor fuel tax increase will be delayed for six months this year, costing about $70 million.
Republicans in the General Assembly opposed the spending portions of the budget but largely supported the tax relief proposals, even though they criticized them as being temporary.
“This budget is nothing more than a campaign tool for Pritzker and the Democratic Party,” Senate Minority Leader Dan McConchie, R-Hawthorn Woods, who voted for the tax relief plan, said in a statement. “Providing one-time checks to people in the mail right before their names appear on the ballot and expire right after the election is a disgrace.”
While Democrats have generally praised themselves for fiscal stability, Pritzker’s Department of Revenue in a March committee presentation noted that much of the unforeseen state revenue growth was a result of pandemic-related shifts in consumer spending and other federal aid, either directly or indirectly.
Revenues for the current fiscal year were about $5 billion higher than originally budgeted last year, creating surpluses that allowed for the flexibility in the fiscal 2023 spending plan.
That was largely driven by increases to the state’s personal and corporate income taxes, as well as sales taxes, as consumers purchased more taxable goods than untaxed services amid the COVID-19 pandemic.
On top of that, the federal government made direct payments to Illinoisans and provided for additional unemployment benefits, which are taxable at the state level, further boosting state coffers.
The revenue windfalls have created the opposite reality of one that Pritzker had predicted would come to fruition if voters rejected his graduated income tax proposal in November 2020.
After that initiative, which would have taxed higher income Illinoisans at a higher rate, failed by a 53-47 margin, Pritzker said “painful” budget cuts were unavoidable.
State Rep. Tom Demmer, R-Dixon, who is a candidate for state treasurer, contrasted the governor’s dire warnings with the financial picture put forth by Democrats in an election year that will see every statewide office and seat in the General Assembly up for grabs.
Between the three budget-related bills signed Tuesday – House Bill 900, House Bill 4700 and Senate Bill 157 – as well as a supplemental appropriations bill Pritzker signed last month – Senate Bill 2803 – the plan includes $500 million beyond statutory requirements to the state’s beleaguered pension funds; $1 billion to the state’s “rainy day” fund which currently has a balance of just $27 million; and an estimated $1.8 billion in tax relief, much of which is temporary.
At a signing event at Chicago State University, Pritzker touted the spending plan as proof of his fiscal leadership as he seeks a second term, contrasting the three-plus years under his leadership with that of his Republican predecessor, Bruce Rauner.
“Do you remember just five years ago when our state was held hostage by the former governor and the majority of the Republican Party?” Pritzker asked rhetorically. “Violence interruption programs were destroyed. DCFS shut down 500 residential beds for our state’s most vulnerable children. The developmentally disabled were forgotten.
Our state’s unpaid backlog of bills piled up to nearly $17 billion and our state suffered eight credit downgrades while sending five of our universities into junk credit status.”
Rauner presided over a 736-day budget impasse in which he and Democrats in the General Assembly failed to bridge ideological gaps to pass a state budget. During that period, court-mandated spending continued at a pace that was billions of dollars more than available revenues, due in large part to the rollback of a temporary tax hike that occurred just before Rauner took office.
Pritzker beat Rauner by 16 percentage points in the 2018 election, and he and Democrats have highlighted the impasse and played up the differences between the two administrations throughout Pritzker’s first term in an effort to claim the mantle of the party of fiscal responsibility in Illinois.
It’s a contrast that Pritzker’s campaign has highlighted in TV advertising, noting that the state has seen credit upgrades from two ratings agencies since he took office and paid down the bill backlog to a regular 30-day billing cycle.
That’s on top of a March debt retirement plan that saw the state dedicate $898 million to pay down old health insurance bills that were collecting interest and $230 million to fully fund the state’s College Illinois program.
The budget also includes $1.8 billion in tax relief, including a one-year suspension on the state’s grocery tax ($400 million), A one-time 5% property tax rebate up to $300 per household ($520 million), and a 10-day sales tax holiday for back-to-school items and clothing from Aug. 5-14 ($50 million).
An additional $685 million would fund one-time direct rebate checks at $50 per individual and $100 per dependent, up to three, for individuals earning $200,000 or less or joint filers earning $400,000 or less.
While that relief was temporary, the budget also permanently increased the earned income tax credit from 18% to 20% of the federal credit while expanding the program to noncitizens who have an individual taxpayer identification number rather than a Social Security number. That program would cost about $100 million.
The state’s statutory annual motor fuel tax increase will be delayed for six months this year, costing about $70 million.
Republicans in the General Assembly opposed the spending portions of the budget but largely supported the tax relief proposals, even though they criticized them as being temporary.
“This budget is nothing more than a campaign tool for Pritzker and the Democratic Party,” Senate Minority Leader Dan McConchie, R-Hawthorn Woods, who voted for the tax relief plan, said in a statement. “Providing one-time checks to people in the mail right before their names appear on the ballot and expire right after the election is a disgrace.”
While Democrats have generally praised themselves for fiscal stability, Pritzker’s Department of Revenue in a March committee presentation noted that much of the unforeseen state revenue growth was a result of pandemic-related shifts in consumer spending and other federal aid, either directly or indirectly.
Revenues for the current fiscal year were about $5 billion higher than originally budgeted last year, creating surpluses that allowed for the flexibility in the fiscal 2023 spending plan.
That was largely driven by increases to the state’s personal and corporate income taxes, as well as sales taxes, as consumers purchased more taxable goods than untaxed services amid the COVID-19 pandemic.
On top of that, the federal government made direct payments to Illinoisans and provided for additional unemployment benefits, which are taxable at the state level, further boosting state coffers.
The revenue windfalls have created the opposite reality of one that Pritzker had predicted would come to fruition if voters rejected his graduated income tax proposal in November 2020.
After that initiative, which would have taxed higher income Illinoisans at a higher rate, failed by a 53-47 margin, Pritzker said “painful” budget cuts were unavoidable.
State Rep. Tom Demmer, R-Dixon, who is a candidate for state treasurer, contrasted the governor’s dire warnings with the financial picture put forth by Democrats in an election year that will see every statewide office and seat in the General Assembly up for grabs.