SPRINGFIELD – Governor JB Pritzker unveiled a leaner state budget on Wednesday that would not increase income taxes but instead rely on federal COVID-19 relief, transfers from other funds and the removal of hundreds of millions of dollars in corporate tax breaks.
Primarily because of the pandemic, Pritzker proposed an operating budget of $ 41.6 billion for the fiscal year beginning July 1 – a decrease of 4.2% from its predecessor.
“I had bolder plans for our national budget than what I will be presenting to you today …” said Pritzker at the beginning of his third year in office. “But just like all of our families had to make difficult decisions last year, so did the state government.”
Opponents have reason to be skeptical. The proposal is a far cry from the terrible predictions made last fall by members of the government who advocated Pritzker’s top priority – a tiered income tax that hit the rich harder. The government claimed that without the change, which was handily rejected, government spending would require a tax increase for all payers or flat rate reductions of up to 20%.
Nonetheless, the blueprint, which on paper turns a deficit of $ 3.9 billion projected in November into a surplus of $ 122 million in fiscal 2022, relies on remittances from other government accounts, the pandemic still debated in Congress – Federal aid and major Illinois fiscal adjustments that are subject to legal scrutiny.
Republicans argued it was a shell game to shield the truly unbalanced budget by $ 1.7 billion.
“He put us on the right track to keep moving money and collecting taxes on companies and manufacturing workers here in Illinois,” said Republican Senate Chairman Dan McConchie of Hawthorn Woods. “The governor continues to show how little contact he has with everyone else when we all have to balance our own budgets.”
Funding for elementary and secondary education is shallow and would not receive the $ 350 million annual markup promised in a 2017 school funding revision. However, Pritzker staff said the education spending would be supplemented with expected federal dollars from a COVID-19 relief package ahead of Congress.
The plan also depends on receiving an additional $ 932 million by ending corporate tax breaks or “decoupling” them from federal tax breaks in these areas. That includes $ 30 million from the reintroduction of corporation tax, which Pritzker cut in his 2019 budget. A cap of $ 100,000 on the company’s net operating loss allowance would be set for three years.
Officials said the cap would not affect 80% of companies with net operating loss allowances, but generate $ 314 million in revenue for the state.
House Republican leader Jim Durkin of Western Springs alleged the governor turned down a deal the two had made over corporate tax breaks necessary to fuel economic growth.
But corporate groups joined Republicans in denouncing the governor’s plan.
Illinois Chamber of Commerce President and CEO Todd Maisch called the tax changes a “massive tax hike”.
“The governor’s plan will have long-term negative effects on job creation and tax revenues for the state, as it leads to an unfair increase in taxpayers after they have resolutely defeated the tiered income tax,” Maisch said in a statement. “This will not only expand taxation, it will also reduce important tax credits for key sectors of the economy.”
Cigarette tax revenues to fund the ongoing Illinois capital rebuilding plan of $ 45 billion would be diverted to general expenses for one year. The municipalities’ share of state income taxes would be prorated to 90%, but Pritzker advisors say cities and counties would offset some of that with more money after the corporate tax break closed.
Some of the shuffling would increase the money for the recruiting agencies required during the pandemic. He called on the General Assembly to take immediate action to provide an additional $ 60 million to bolster the unemployment insurance program that has been marked by pandemic job losses. And he wanted to add $ 28 million to the on-demand Monetary Awards program to allow more low-income students to attend college.
Spending pressures would be drastically reduced if it weren’t for one household albatross before the pandemic: contributions to the state employee pension. Since the annual contributions to the severely underfunded program can no longer be skipped, $ 9.4 billion will flow into retirement provision.
Democrats praised the governor for responsibly funding basic needs – including crucial, if nondescript, pension payments – without burdening people with higher taxes.
“He was able to draft a balanced budget … without raising taxes for working and middle-class families,” said Des Plaines Democratic Senator Laura Murphy. “In fact, he is making a really concerted effort to address the spending so that the state of Illinois will spend within the taxpayer-allocated funds.”
Pritzker had harsh rhetoric for “far-right” Republicans at all levels of government who referred to them as “carnival barons” for opposing state aid to states and defying health guidelines.
The governor submitted his combined state and budget address from the Illinois State Fairgrounds. There he awakened the echo of the field hospital, which was set up in 1918 to care for overflow victims of the pandemic influenza that began that year. It is now one of the largest coronavirus vaccination sites in the state.
• Capitol News Illinois and the Chicago Sun-Times contributed to this report.