Gov. J.B. Pritzker proposed a continuation of fiscal responsibility — and introduced new investments in healthcare accessibility and education — during his annual budget address Wednesday.
Pritzker's proposed total expenditure for the upcoming fiscal year is $52.697 billion, with a surplus of $128 million. Pritzker praised the state’s development over the last few years and pledged to pass a balanced budget.
“We created a $2 billion Rainy Day Fund. We achieved nine credit upgrades. And in the face of a pandemic and high inflation, we delivered historic tax relief, provided record levels of rental and mortgage assistance, and reduced interest costs by paying off more than $11 billion in debt,” he said.
State Rep. Ryan Spain of Peoria said he’s concerned about how the state will pay the nearly $53 billion price tag. Pritzker’s proposal points to projected growth in income tax, as well as proposed increases in the sports wagering tax and a cap on the sales tax retailers discount, to pay for the budget.
Spain said he’s worried about the impact on businesses.
“The governor's looking to pay for some of those spending increases through taxes on jobs, employers and businesses,” he said. “It's just exactly what we don't need right now, in a state that is not delivering the type of economic growth that many of our other states are experiencing.”
He says economic growth should be the state’s top priority.
“We are so desperate, in downstate Illinois, to have economic growth. And again, you can't deliver that by increasing costs to employers in the state of Illinois. And so that's what he has done, whether it's increasing the fees for retailers or keeping businesses from claiming certain tax exemptions.”
Eliminating the state grocery tax
The proposal includes permanently eliminate the state's 1% sales tax on groceries.
Pritzker said even though inflation is easing, people are still feeling the squeeze when they buy food.
"It's one more regressive tax that we just don't need. If it reduces inflation for families from 4% to 3%, even if it puts just a few hundred dollars back in families' pockets, it's the right thing to do," Pritzker said.
Republican state Rep. Bill Hauter of Morton said the state should cut spending elsewhere.
"We don't have to make up for that revenue. There are other areas where we are increasing revenue and I'm not exactly in favor of them," Hauter said.
Hauter said the state is spending too much on healthcare costs, particularly for undocumented immigrants.
Democratic state Rep. Sharon Chung from Bloomington said the grocery tax proposal was one of the few things in the budget speech that got applause from both sides of the aisle.
"To me I guess if it's got such a widespread bipartisan support, that maybe seems like one of those things to try to work on to bring that together," Chung said.
When asked where she would cut to make up for the lost tax revenue, Chung, who represents parts of Bloomington-Normal, said "anything can be negotiated."
Funding for migrants
Hauter, an emergency physician and anesthesiologist, says the state is spending too much on healthcare, particularly for undocumented immigrants.
Pritzker scolded Texas Gov. Greg Abbott for busing asylum seekers to Illinois. Hauter said the governor has incentivized migrants to come to Illinois because of the state’s “Cadillac’ healthcare plan for undocumented immigrants.
“(Pritzker) has abdicated his responsibility both fiscally and his fiduciary responsibility to the taxpayers of Illinois,” Hauter said.
Chung acknowledged the issue of migrants shipped north to Illinois from the border area complicates a tight budget year. 35,000 asylum seekers have come to Illinois, most bussed north over the last year and a half.
Chung said lawmakers will have to make some compromises to afford the money Governor Pritzker wants to spend to help migrants.
"We have a bit of a shortfall here this year. There are a lot of costs we did not really see happening last year that we had to deal with and now the issue is still sort of happening this year," Chung said.
Meanwhile, Republican state Sen. Sally Turner says she is "deeply concerned" with the governor's continued prioritization of funding noncitizen programs at the expense of Illinois families.
“This proposal will raise taxes on Illinoisans by more than a billion dollars, roughly the same amount of money he wants to spend on noncitizen programs. Far too many Illinoisans are currently struggling to afford necessities, including groceries and prescriptions. It is completely unacceptable for the Governor to ask those very Illinoisans to foot the bill for the ongoing migrant crisis," said Turner, of Lincoln.
Pritzker told lawmakers having state government ignore the problem is not an answer.
"Maybe some of you think that we should say this is not our problem and let the migrant families starve or freeze to death. But that's not what decent Midwesterners do," Pritzker said.
Pritzker said his office has helped develop a response plan for the next year, estimating the cost to meet basic human needs, increase diversions from temporary to permanent shelters and get authorization to work for many.
He said the state should pay a little more than half the cost and has proposed an appropriation of $181.7 million.
9,000 migrants have already moved from arrival to temporary and on to more permanent housing. Thousands more have moved on themselves, said Pritzker.
Education funding
The budget proposal also includes $400 million in new and maintained funding for Smart Start Illinois. The program created more than 5,800 new preschool slots in preschool deserts since its launch last year.
Pritzker said Smart Start has had the desired impact on Illinois working families.
“There was a real fear that our entire childcare system might crumble in the wake of the pandemic,” he said, “Instead, it’s growing.”
In addition to the Smart Start funding, FY25 includes a K-12 education budget increase of $350 million to fulfill evidence-based funding requirements, and a higher education funding increase of state institutions by $30 million in direct operating support.
Democratic state Sen. Dave Koehler of Peoria said he’s particularly encouraged by the proposed increased spending in education and childcare.
“This is one of the big issues that I hear from families with young children is that they have to have some help in terms of just making ends meet and making sure that they can care for their children in the way that they want to care for them,” Koehler said.
The proposal also includes a new state child tax credit for low and middle income families with children under 3. Pritzker proposes the investment of $12 million to create a Child Tax Credit.
“By targeting this investment at low and middle-income families with children under 3, we can put money back in the pockets of our newest parents who need it most and make those early years just a little bit easier,” Pritzker said.
Healthcare
Hauter said he welcomed the governor’s proposed insurance reforms that Hauter described as more “provider friendly instead of insurance company friendly.”
Pritzker’s plan would, among other things, make Illinois the first state in the nation to ban prior authorization for in-patient adult and children’s mental health care. It would also limit rate increases from larger insurers.
The budget proposal includes $10 million to be used to eliminate medical debt for Illinois residents. Partnering with the organization RIP Medical Debt, Pritzker says the money will be the start of a four-year plan to eliminate $4 billion in medical debt for more than 1 million Illinoisans.
What's next?
Koehler said he thinks Pritzker's budget is a good starting point, but that it is a proposal.
"It isn't a budget until the legislature gets finished with it and puts it on the governor's desk for him to sign," he said. "So there's gonna be a lot of discussion now, this is the starting point, we'll get into our preparations committee hearings on the various issues in the budget and will come out at the end."
Democrats in the Senate and House of Representatives have a supermajority and do not need Republican votes, but Koehler said there will be "plenty of opportunities for Republicans to engage in that kind of discussion."
Spain said House Republicans also plan to meet with Senate Republicans and the governor's office to express their thoughts on the budget, as they have not been included by House Democrats in budget discussions.
Both chambers are scheduled to adjourn May 24.
Charlie Schlenker and Eric Stock contributed to this report.
