As he gears up for re-election, Illinois Gov. JB Pritzker served up a $45.4 billion spending outline Wednesday that was heavy on tax relief and bolstered his campaign narrative that the state’s historically glum finances have turned rosy during his watch.
A snowstorm deprived the Democratic governor of a full, in-person audience for his annual budget address, but it didn’t deter his heralding of a push to provide nearly $1 billion in tax relief that he said is essential to confront the effects of surging inflation.
Fueled by unexpected jumps in state income and sales tax revenues, his administration finds itself in rare budgetary air because it is expected to end the state fiscal year in June with a $1.7 billion surplus, which will be used, in part, to pay for the one-time tax relief.
“Responsible fiscal management is yielding substantial savings, unburdening our state from the anchor that has weighed us down for far too long,” Pritzker said in his budget address to an audience made up of members of his administration and a smattering of lawmakers.
“So, as we move on to tackle the questions of what vital current priorities our government should fund, know that we start from a place where our bills are paid, our most pressing short-term debts are nearly gone and our most critical long term financial liabilities are in the best fiscal shape they have been in since the turn of the century,” the governor continued
Pritzker is seeking funding increases for primary and secondary education, universities and social services; wants to add $500 million more than is required to the state’s annual $9.6 billion pension payment; and aims to boost the state’s rainy day fund to $879 million, the highest balance since its creation roughly two decades ago.
In past years, signature speeches like the one the governor delivered Wednesday would have come before a crowded House chamber, where Democrats have a stranglehold majority that has the capability of muscling through whatever the governor wants.
But a huge Midwestern snowstorm shut down much of Springfield and made Wednesday’s speech at the Old State Capitol largely a virtual one. It marked the second straight year that the governor outlined his spending priorities to an empty or nearly empty venue. Last year, Pritzker spoke from an Illinois State Fairgrounds building because the pandemic made gathering in close quarters too risky, particularly since vaccines were not yet in wide distribution.
The new spending plan the governor is putting on the table will be on a fast track this spring since the legislature is scheduled to conclude its business April 8 so lawmakers can hit the campaign trail ahead of the June 28 primary elections.
The centerpiece of Pritzker’s proposed budget clearly appears built around boosting his fortunes in November, when Republicans are forecast nationally to retake the U.S. House and post gains in statehouses across the country.
Tax relief plans
In a nod to inflationary pressures that have left Democrats across the country vulnerable, Pritzker’s tax-relief package includes the temporary suspension of a 1% sales tax on food. It also stops a planned 2.2-cent increase in gasoline taxes from taking effect in July.
Additionally, Pritzker is proposing property tax rebates that could yield payments of up to $300 for 2 million Illinois homeowners ahead of the Nov. 8 general election, marking the first time in more than two decades the state treasury would be opened at such a scale for property tax relief. Payments could start going out as early as July.
Pritzker made the case Wednesday that the tax relief was necessary to help Illinoisians who have been hurt by surging inflation.
“Whether it’s supply chain interruption or increasing oil prices, inflation is squeezing Illinois families,” the governor said. “Government ought to do more to ease the pain and put more money back in the pockets of hardworking Illinoisans. Our budget success gives us the opportunity to do just that.”
In the days leading up to Wednesday’s speech, Republicans characterized Pritzker’s offer of tax relief as “election-year gimmicks,” noting that only two years ago the governor was pleading poverty while bankrolling a failed push to change the state’s income tax structure to put a heavier burden on wealthy Illinoisans.
“It is no surprise that the Tax-Hiker-In-Chief is attempting to rewrite history today to mislead Illinois voters in an election year with gimmicks that rely on a disappearing federal bailout,” said Aurora Mayor Richard Irvin, one of five declared Republican candidates seeking to unseat Pritzker.
“This is the same governor who pushed for the largest tax hike in our state’s history on Illinois families and businesses, and we know he plans to raise billions more in taxes when the federal money runs out. The only way to stop Pritzker’s permanent tax hike campaign is at the ballot box in November,” Irvin said in a statement.
“The governor’s budget address is always a wish-list, and this year it’s clear that the governor wishes to be reelected,” House Minority Leader Jim Durkin, R-Western Springs, said in a statement. “The budget laid out by Governor Pritzker today is packed with gimmicks and one-time tricks, but no structural reforms. The people of Illinois deserve a governor who will be honest and work to actually fix things like property taxes and out-of-control crime.”
Response to crime
Republicans also have criticized Pritzker’s response to growing crime throughout Illinois, but particularly in Chicago and the suburbs. Billionaire hedge fund manager Kenneth Griffin, who has pledged to be “all in” in defeating Pritzker this fall, last fall called the governor’s approach to crime a “disgrace.”
In Wednesday’s speech, however, Pritzker attempted to offer an answer to that criticism on crime, emphasizing new investments in State Police crime labs near Joliet and Decatur, funding for what he said was the largest number of new State Police cadet hirings in a year and a $250 million multi-year commitment to crime prevention.
“Smart investments in front line personnel, in protecting witnesses, in community renewal, in mental health, in economic opportunities and in solving crimes are the best ways to reduce violence in our streets,” he said.
The governor also spent part of his speech offering up a fiery ideological reminder to his base and to independent, female and collar county voters critical to his re-election that he has been a bulwark against red-state extremism during his term.
“At a time when politicians in some places have dipped their toes into the waters of sedition, or pulled chairs up for the ghosts of Jim Crow, or spurned the fires of educational curiosity in favor of book banning, or are telling women you have to take your reproductive health choices back to the 1950s; at a time when some would question the very foundation of science and medicine; at a time when some would condemn simple acts of courtesy and kindness like wearing a mask so that fewer people die; this government in this state said, not here,” the governor said, drawing applause.
Implementing the governor’s proposal will fall in the hands of Democratic supermajorities in the House and Senate, which like Pritzker are looking for victories to help ride out a potential GOP wave of victories forecast for the fall.
Gas, food and property tax relief details
The suspension of the 1% food tax, which would cost $360 million, would mean a $2 savings on a $200 weekly shopping bill. But consumers in Chicago still would pay a 1.25% sales tax on food, money that helps fund the Regional Transportation Authority, a levy that wouldn’t be touched in Pritzker’s spending plan.
Pritzker’s proposal on the gas tax, which would cost $135 million, would keep the existing 39.2-cent per gallon motor fuel tax in place beyond next July. Under a 2019 state law, which dictated that the state’s gas tax would grow every July based on the consumer price index, a 2.2-cent increase had been expected to be tacked onto the current tax.
And the property tax rebate component would apply to individuals making $250,000 annually or less or to couples making $500,000 or less. That provision would be the priciest of Pritzker’s proposed tax cuts, coming in at $475 million. Rebates would be capped at $300.
State Sen. Darren Bailey, R-Xenia, another of the declared GOP gubernatorial candidates seeking to unseat Pritzker this fall, ridiculed the governor’s speech and zeroed in on the sparsity of his proposed tax relief. Bailey called for making the food and gas tax suspensions permanent, rather than letting them expire in a year.
“To sit here and to try to be wooed by this nonsense of just temporary saving a few cents here and there for the average working family out there – I think this is an actual slap in the face for everyone,” Bailey said in a post-speech appearance on WBEZ’s Reset With Sasha-Ann Simons.
But Senate President Don Harmon, D-Oak Park, lavished praise on the governor’s budget priorities.
“I’m not accustomed to good news in a budget speech,” he said in a statement. “This is a budget proposal unlike any I’ve seen in my time in the Senate. It speaks to the work we’ve done, together, to bring stability to our state finances.
“That stability allows us to invest back in our state and provide relief to those hit hardest by the pandemic and associated economic downturn,” Harmon continued. “There’s a lot to like with this plan, and I look forward to working with the governor to produce a final product.”
Opposition to at least one prong of Pritzker’s tax-relief package began to emerge after his speech from the Transportation for Illinois Coalition, a group of business and labor groups unhappy at the governor’s plan to block the planned increase in the state motor fuel tax from taking effect in July.
“Taking $135 million out of the planned construction program now will have a more significant impact over several years, as projects that could be planned with those funds will be delayed,” the group said. “At the same time, revenues will not keep up with rising inflation-driven construction costs. It also could create a political temptation to skip future scheduled small tax increases that will worsen our funding problem.”
Funding pensions and saving for a rainy day
Illinois’ unfunded pension liability has ballooned from$20 billion to about $130 billion since 1995. The state hasn’t made a payment to the fund beyond the legally required minimum since then – and has skipped them altogether more than once.
But Pritzker is proposing pouring an extra $500 million into paying down that liability. He said the move will save Illinois taxpayers $1.8 billion dollars in interest payments in the long term.
Senate Minority Leader Dan McConchie, R-Hawthorn Woods, supports the goal of closing the pension gap.
"We definitely need to get our pension system under control,” he said. “One of the best ways of doing that is doing what the governor is suggesting.”
But McConchie said Illinois’ pension problem is going to take much more to fix.
“While I support the concept of putting extra money in there – I think it will save people money overall – we still need to look at fundamental reform,” " he said.
Another of Pritzker’s proposals to garner some GOP support was Pritzker’s pitch to divert $879 million over two years into a “rainy day fund:” cash on standby to allow the state to function during an emergency situation.
Since it was established in 2001, the account has been chronically low — even nearly empty in some recent years.
“Right now, the average state can run for 29 days on its rainy day fund,” Pritzker said. “In Illinois, we can run for 15 minutes.”
Rep. Tim Butler, R-Springfield, praised the move “because we've seen what happens when we don't have a rainy day fund,” he said, referring to the pandemic.
Surging revenue
The state’s financial picture has been improving under Pritzker with state income and sales taxes surging ahead of projections. In November, in a presentation to bond investors, Pritzker’s administration disclosed year-to-date state revenues were $1.3 billion ahead of previous-year levels.
As a result of the changing tide, Moody’s Investors Services last June became the first ratings agency to upgrade the state’s bond rating in two decades, pulling Illinois back from the cusp of junk-bond status.
Beyond stressing those financial improvements, Pritzker used his speech to also emphasize the physical and economic struggles Illinoisans have faced during the pandemic and repeatedly invoked the teachings of the famed, late anthropologist, Margaret Mead, who taught the importance of caring for others.
“Maybe it’s time we remember what Margaret Mead was trying to teach…long ago: that who we are is measured by how we care for those who need us. And that we wouldn’t be standing here today if that simple ancient value wasn’t deeply ingrained in our very existence,” Pritzker said, delivering some of the final lines of his more than 45-minute speech.
“Illinois, the state of our great state is strong, unbreakable and enduring. It is sustained every day by the deep, overwhelming kindness of its people, by the hopes of its leaders and by our common commitment to face an uncertain tomorrow with the strength built by surviving our yesterdays,” he said.
The story has been corrected to clarify how much the motor fuel tax is projected to increase in July without legislative action.
WBEZ’s Caroline Kubzansky contributed from Springfield.