Fending off critics of the largest budget in Illinois history, Gov. J.B. Pritzker said the $53.1 billion spending plan he signed Wednesday will jump start economic development, provide relief to the poor and tackle other “important issues at the top of mind for Illinois families.”
“We’ve heard complaints every year after we balance the budget. ‘The next year’s going to be terrible,” Pritzker said during a signing ceremony in Chicago, flanked by Lt. Gov. Juliana Stratton and the General Assembly’s top Democratic leaders. “You heard that in 2021. You heard that in 2022. You heard that in 2023. You’re hearing it in 2024. People say it every year and you know what we’ve done? Balance the budget every single year.”
Pritzker has yet to sign a revenue package that includes roughly $750 million in tax hikes necessary to balance the budget, but said Wednesday he plans to do so without making any changes.
While the budget passed comfortably in the House by a 65-45 vote and more convincingly in the Senate by a vote of 38-21, negotiations in the Democratic-controlled chambers stretched into overtime and seven Democrats in the House and two in the Senate joined Republicans in voting no.
While the Democratic opposition to the budget was largely silent, Republicans were clear about the shortcomings they see in the budget that takes effect July 1, in particular $182 million in spending on the migrant crisis in the Chicago area and hundreds of millions more on health care for immigrants.
“In six short years, Gov. Pritzker has raised the cost of state government by over 30 percent and expanded non-citizen spending from a few million dollars per-year to nearly a billion dollars per-year today,” Senate Republican Leader John Curran of Downers Grove said in a statement Wednesday.
Democrats went into the budget season knowing talks would be difficult, with the governor’s office last year projecting a shortfall of close to $900 million based on pension contributions and other costs rising faster than projected revenue. That figure needed to be made up through some combination of spending cuts or tax increases.
“We knew going into the start of the year that this was going to be a tougher budget than in the previous years,” House Speaker Emanuel “Chris” Welch, a Democrat from Hillside, said at Wednesday’s news conference. “It was not easy getting there, but I do believe this budget continues to make Illinois a great place to live, work and play.”
The sweeping revenue measure that includes the hundreds of millions of dollars in tax increases was a particular sticking point. It took three votes in the House — enabled by a motion to suspend a rule limiting lawmakers to one do-over — for Democrats to round up the bare minimum 60 votes necessary to pass the bill. Eleven of the chamber’s 77 Democrats voted against the plan, while six others were either absent or did not vote.
The measure includes a limit on the tax discount retailers would receive for collecting sales tax, something the governor’s office predicts could bring about $101 million in additional revenue.
To gain support from the Illinois Retail Merchants Association, a deal was struck to eliminate certain credit card fees, known as interchange fees, on the portion of transactions that includes sales tax and tips. Banks and other financial institutions rallied against the move, saying it would create a burdensome and expensive implementation process that would lead to a worse experience for consumers. Earlier this week, advocates for those institutions, including the Illinois Bankers Association and Illinois Credit Union League, urged Pritzker in a letter to veto the section of the revenue bill that addresses the credit card fee elimination.
“In no jurisdiction in the U.S. or in the world does the electronic payment system differentiate the internal, private elements of a purchase,” the groups wrote. “A change to the payment system of this magnitude involving and impacting more than seven million Illinois card holders, hundreds-of-thousands of Illinois merchants, and thousands of card-issuing banks, credit unions, and processors cannot be implemented in a mere 13 months.”
But Pritzker on Wednesday said he doesn’t “foresee any changes” to the revenue measure and intends to sign it before July 1.
“I will say that the interchange fee issue is certainly something we’re always willing to discuss, revisit, have a conversation about,” he said. “There’s time to do that through the rest of the year and I’m happy to listen to them.”
Other tax hikes in the measure include raising the state sports betting tax, now a 15% levy on post-payout revenue, through a tiered structure that would see the largest sportsbooks paying a 40% tax and the smallest paying 20%. The change is expected to bring in $200 million in new operating revenue.
The largest share of the new revenue would come from continuing to cap the losses large corporations can write off on their state income taxes, a move that the state says would bring in an estimated $526 million.
On Wednesday, Pritzker and Democratic leaders stuck to the items those hikes will help pay for.
In education, the governor’s office noted an outlay of $45 million for the second year of a three-year pilot program to fill teacher vacancies; an increase of $10 million to a total of $711 million for Monetary Award Program grant funding for college students; and an additional $75 million in grant funding for preschool enrollment.
The budget increases funding by $90 million to over $290 million for a state program to combat homelessness, with some of that money aiding migrants; provides more than $50 million to the Department of Children and Family Services for nearly 400 new employees; and provides for a $50 million child tax credit that would cover families with children under 12, according to the governor’s office.
The governor also has touted a move to end the 1% statewide grocery tax. But the tax won’t be eliminated until Jan. 1, 2026, to give local governments, who receive the revenue from the tax, time to prepare, and it likely won’t go away for all residents. Legislators passed a measure granting municipalities the ability to levy their own 1% tax on groceries, while towns without home rule would be able to tack on an additional 1 percentage point tax on general retail sales without a voter referendum.
“Education, health care, housing, child care. These are some of the most important issues at the top of mind for Illinois families and this budget goes a long way toward addressing them,” Pritzker said. “Our tax cuts, debt reductions, grants and scholarships are providing breathing room and support when people are feeling the pinch of inflation.”
Among criticisms of the budget within Pritzker’s party was the $350 million annual increase in funding for elementary and secondary education, the minimum amount under the state’s school funding formula. The Chicago Teachers Union and Mayor Brandon Johnson sought over $1 billion for the Chicago Public Schools alone and Democratic Rep. Will Davis of Homewood had repeatedly suggested increasing the school funding formula to about $550 million statewide would be adequate.
And while the budget makes the legally required pension payment of about $10 billion, it does not include a Pritzker-backed proposal to manage the state’s massive pension debt by increasing the funding target to 100% from 90% and extending the payment deadline by three years, to 2048.
“I certainly will make sure that (the pension proposal) gets a hearing and I expect that we’ll be able to do something that will put us in even better fiscal shape than we already are in,” Pritzker said.
Illinois Comptroller Susana Mendoza on Tuesday took to social media to say that while “there’s a lot of good in the new state budget” she would have liked to have seen “perhaps some more cuts across the board.”
This prompted pushback from two of Pritzker’s top aides.
“We keep hearing that word—bloat. However, I’ve yet to see a specific list of bloat, let alone someone doing the work of drafting & filing legislation to cut the bloat,” Deputy Gov. Andy Manar, Pritzker’s budget point person, said Tuesday on “X.”
Mendoza spokesman Abdon Pallasch said Wednesday that Mendoza’s phrasing of “across the board” was in reference to state agencies and constitutional offices, such as hers and the governor’s, not to various state programs funded under the spending plan.
Next year, Pritzker and lawmakers will have to deal with issues including a $730 million fiscal cliff for Chicago-area public transportation agencies. But Sen. Elgie Sims, the Senate Democrats’ chief budget negotiator, described the upcoming budget as “forward-thinking” and said “Illinois is on the right track.”
“Don’t let anybody tell you anything different,” said Sims, of Chicago. “The reality is we are making the investments necessary to grow our state’s economy but also make Illinois a better place for those who live, work and call Illinois home.”
