Each year in February, Illinois’ governor must propose to lawmakers a spending plan for the upcoming fiscal year. The General Assembly will then spend the next several months negotiating which proposals to include and which to scrap before sending the budget back to the governor for consideration. 

Last Wednesday, Gov. JB Pritzker delivered his fourth proposed budget, this one for the fiscal year 2023 that will begin July 1.

He simultaneously delivered his annual State of State address. 

Pritzker began by reflecting on progress the state has made both in terms of pandemic recovery and since he first became governor in January 2019. 

Through childcare support programs that delivered relief grants to caregivers and bonuses to childcare workers, relief programs for landlords and tenants that prevented Illinoisans from losing housing, partnering with the General Assembly to provide almost a billion dollars to Illinois small businesses and more, Pritzker said Illinois was able to weather the pandemic storm. 

“With all of our efforts over the past two years – city, county, state, federal – we’re seeing signs of progress every day,” Pritzker said. “Our investments in working families and small businesses are paying off. Since the bottom of the pandemic recession of April 2020, we have added 600,000 jobs and grown the overall state GDP beyond pre-pandemic levels. Illinois’ job growth now outpaces the national job growth. Wages have increased for working class families and jobs are available for workers of nearly every skill.”

Not only is Illinois on the road to recovery, it is becoming a leader in mitigations, Pritzker said. 

“One thing we can all do right now is continue rising to the challenge of combating the pandemic head on, and we are,” Pritzker said. “A larger percentage of Illinoisans have been vaccinated than in any other Midwestern state.” 

Pritzker’s outlined budget plans for an anticipated $1.7 billion surplus for the fiscal year ends June 30, something he takes pride in considering the financial circumstances of the state when he became governor. 

He explained that in January 2019, Illinois had a $3.2 billion deficit, $7.9 billion in unpaid bills and Illinois’ “credit hovered at just one notch above junk status.” 

The head of the Democratic party in Monroe County agrees.

“All of the (Democratic leaders) have done a great job considering what they came into,” Scot Luchtefeld, chair of the Democratic Central Committee of Monroe County, said. 

Luchtefeld cited how the state’s bill backlog now only contains unpaid general fund bills which are approximately 15 days old. 

In his address, Pritzker said this once spanned 500 days past due. 

State Rep. David Friess (R-Red Bud) said he does not buy into the financial success Pritzker said his proposed budget will bring, nor into how Pritzker said he has “consistently balanced the budget.” 

“This ‘healthy’ portrayal is due purely as a result of the federal funds lavished on Illinois as a result of the COVID-19 pandemic,” Friess said. “What does the governor do with these funds? Does he pay outstanding debts, or stabilize the state while needed structural reforms are made? No. The Governor chose to increase spending once again to the tune of $45 billion. Evidently, he believes he can spend his way out of a financial crisis. Remember, these federal funds are temporary, and once they are gone, the same structural problems will remain.”

Almost anticipating this response, Pritzker countered this point in his address. 

“Now, I know that the same tired old characters who are always so desperate to bad-mouth Illinois will falsely attribute our fiscal success to the federal American Rescue Plan Act. As usual, they’re wrong,” Pritzker said. “Let me set the record straight for you – our state budget surpluses would exist even without the money we received from the federal government. Painstaking work has been done in coordination with the General Assembly and Comptroller Susana Mendoza over the last three years to diligently and meticulously reverse the irresponsible decisions of the past and ensure that responsible budgeting would become the rule, not the exception.” 

As Friess mentioned, the governor asks lawmakers to spend $45.4 billion from its general revenue funds in his FY23 proposed budget, which are the main discretionary spending accounts for state lawmakers. 

Revenues are projected at $45.8 billion, with about $41.8 billion from state sources and the rest from the federal government. 

The budget spends about $1.6 billion less than the one for the current fiscal year, based upon updated estimates from the governor’s office.

Below is a look at some major expenditures and new initiatives proposed by the governor in his proposed budget, along with how local political leaders feel about them. 

Temporary tax relief 

The governor cited rising inflation as the basis for creating about $1 billion in temporary tax relief for motor fuel, groceries and property taxes.

The motor fuel tax relief would not lower gas prices, but it would prevent an annual increase to the motor fuel tax that is written into law from taking effect this year. It prevents a hike of 2.2 cents per gallon of gas, according to the governor’s office – a taxpayer savings it pegged at $135 million.

Motor fuel tax money does not go to the general revenue fund, but rather to road construction projects. The tax holiday does not appear to affect a proposed $46.5 billion (over six years) capital infrastructure budget, which is mostly an extension of the 2019 Rebuild Illinois plan.

The governor also proposed rolling back a 1 percent state grocery tax for the fiscal year, a taxpayer savings pegged at $360 million. The state would reimburse local governments for the effect of the tax holiday.

Republican candidate for governor Paul Schimpf of Waterloo took issue with this specifically. 

“With Illinoisans already burdened by some of the highest effective tax rates in the nation, it is extremely offensive that Gov. Pritzker would refer to his tax cut illusion as ‘relief,’” Schimpf said, later continuing, “Our silver spoon governor seems to believe a temporary 1 percent reduction in the grocery tax is a silver bullet. In truth, I doubt the governor knows the cost of a gallon of milk unless his aides added it to his daily briefing.” 

Illinoisans currently eligible for a 5 percent property tax credit under current law – that is, joint filers earning below $500,000 and single filers earning below $250,000 – would be eligible for another 5 percent property tax credit under the proposal, up to $300. The taxpayer savings is estimated at $475 million.

Sen. Terri Bryant (R-Murphysboro) voiced concern that these tax relief proposals would not cut it. 

“I appreciate that the Governor somewhat recognized the need to get our fiscal house in order as well as the need to provide financial relief to our taxpayers,” Bryant said. “However, the people of our state need more than his one-year, election gimmick relief proposals. They deserve a permanent tax relief plan that helps them keep up with inflation at the grocery store and ballooning property taxes.” 

On the topic of motor fuel taxes, Bryant said her plan is superior. 

“Additionally, while I completely agree that we must provide relief for skyrocketing gas prices, I have concerns about his backdoor attempt to take critical funds away from our motor fuel lockbox and desperately needed construction projects. Our Caucus’ recently announced proposal offers up a better solution that not only helps alleviate Illinoisans’ burden at the pump by cutting sales tax on gasoline but injects more funding into our lockbox,” she said. 

Public safety 

Pritzker noted his budget includes an $18.6 million increase to allow for three classes of Illinois State Police cadets. Another $5.4 million will go to opening a new forensic laboratory in Decatur in August.

The budget also includes $4.5 million to fund body cameras for ISP in accordance with a criminal justice reform bill passed one year ago, as well as providing the Illinois Law Enforcement Training and Standards Board with $10 million for distributing grants to local law enforcement for body cameras.

The Department of Human Services budget includes $240 million as part of a two-year, $250 million commitment to the Reimagine Public Safety Act, which aims at investing violence prevention resources in some of the state’s most dangerous areas. Just $5 million of that comes from the general revenue fund, with $235 million funded through the American Rescue Plan Act.

“Crime is a complex and multi-faceted problem to tackle, and it’s cynical and counter-productive to simply shout “lock them up” while providing fewer resources to the people and programs that prevent crime in the first place,” Pritzker said.

Pension contributions 

Illinois’ largest general revenue fund expenses continue to be K-12 education and pensions. The latter will make up 20.7 percent of the proposed general revenue spending in the upcoming budget, or about $9.6 billion.

The governor has proposed adding another $500 million to the pension payment beyond what is required by law in fiscal years 2022 and 2023.

That’s notable because previous governors have been widely criticized for shortchanging the pension system – something Pritzker proposed, then quickly abandoned, in his first year in office. 

Critics often point out that the state law governing pension payments already shortchanges the system from what accountants suggest should be paid into it.

The governor proposed spending $300 million of the surplus from the current fiscal year to pay down pensions, with $200 million added to the statutory payment in the upcoming budget. 

The governor’s office estimated the $500 million increase beyond statutory amounts would reduce unfunded liabilities – which sit at about $130 billion – by about $1.8 billion. A pension buyout program previously approved by the General Assembly has reduced that liability by about $1.4 billion, according to the governor’s office.

K-12 Education

Approximately 21 percent of the budget is dedicated to Pre-K-12 education – an increase of $498 million from one year ago.

The budget asks for $54.4 million to provide early childhood education services to another 7,100 children, and another $96 million in transportation and special education grants for schools.

Another $12 million would be added to the Regional Office of Education budget to address truancy and chronic absenteeism, and agriculture education funding would increase by $2 million.

The $498 million increase includes $350 million for the evidence-based funding formula for K-12 schools, which prioritizes new money toward the schools furthest from their “adequacy” target. The formula takes into account class sizes, a local district’s property values and other factors. 

 Rainy day fund

Illinois’ “rainy day fund” at its height contained only about $300 million since its 2001 creation, but that was spent down to almost nothing during a budget impasse under former Gov. Bruce Rauner, a Republican, and Democratic leaders in the General Assembly. 

Pritzker’s budget proposes adding $600 million to the fund with a supplemental budget from the current fiscal year, while dedicating $279 million to the fund in FY2023 to bring the balance up to $879 million.

“The past few years have shown us that rainy days do actually arrive, and it’s time to begin rebuilding protections from future fiscal calamities,” Pritzker said. 

The governor also proposed dedicating $898 million to pay down overdue health insurance bills.

 Higher education  

The governor proposed spending $2.2 billion on higher education, a $208 million increase from the current year. That includes a $122 million increase to Monetary Award Program grants to help students demonstrating a financial need attend college.

Universities and community colleges would see their budgets increased 5 percent, or $68 million, while adult education programs would see $2.5 million in new funding and funding would increase for minority teacher scholarships by $2.3 million.

Through College Illinois, a state-run prepaid tuition plan that is no longer open for enrollment, the state has about $230 million in obligations that the fund cannot currently meet. Pritzker proposed spending $230 million in general revenue funds to pay down that remaining balance, and his team estimated the long-run savings at about $75 million. 

In order to address the health care worker shortage, Pritzker is asking the General Assembly to broaden MAP scholarships to cover health care industries and eliminate licensure fees for 470,000 health care workers. The proposed budget also creates the Pipeline for the Advancement of the Healthcare Workforce program. 

“The goal is to model this program after the highly successful Workforce Equity Initiative championed by State Representative Jehan Gordon-Booth. The PATH program will invest $25 million in our community colleges to remove barriers for recruitment and training of new front-line health care workers,” Pritzker said. 

 Safety net

The beleaguered Department of Children and Family Services would see a funding increase of $250 million, or 16 percent, to about $1.3 billion from general revenue funds. That includes rate reforms for private sector providers in an effort to address staffing shortages, totaling $87.1 million.

The budget also provides $15.5 million to hire an additional 360 employees to address growing caseloads, improve caseload ratios and continue operations in licensing, monitoring and clinical services.

“Aggressively protecting and supporting vulnerable children and families is a high priority for us all,” Pritzker said. 

Funding for nursing homes would increase by $500 million, with lawmakers expected to take up rate reforms and a new provider assessment designed to maximize federal dollars, encourage improvement of care and staffing ratios.

Unemployment trust fund

As of Feb. 1, Illinois owed the federal government more than $4.5 billion for advances received to keep its unemployment insurance trust fund afloat during the height of the COVID pandemic. By Sept. 30, Illinois will owe almost $32 million in interest on that borrowing. 

If the state doesn’t take action to pay down the deficit, it could lead to massive unemployment insurance rate hikes on businesses and cuts to benefits for those claiming unemployment.

The budget does not include any money to pay down the borrowing, but the governor’s office said it remains in negotiations with lawmakers and representatives of labor and businesses on a solution. There’s serious consideration of using much of about $3.5 billion in remaining federal American Rescue Plan Act funding to pay down the deficit, according to the governor’s office.

 Revenues

The budget does not call for raising taxes to create any new revenues.

The state does expect a 4 percent increase in income tax receipts at $22.4 billion. Corporate income taxes are expected to decline 5.4 percent to $4.4 billion, with sales tax decreasing 1.3 percent to $9.9 billion and other sources netting $3.1 billion.

The lottery is expected to bring in $754 million, legalized gambling $157 million, and adult-use marijuana $142 million. 

Federal sources account for just over $4 billion.

(with reporting from Capitol News Illinois)