Gov. J.B. Pritzker signed the largest spending plan in state history on Wednesday along with progressive tax rates that would only take effect if voters approve a constitutional amendment on next year’s statewide ballot.
The budget that will take effect July 1 is about $107 billion with all funds included. The state plans to spend $40.6 billion in general fund revenue. Pritzker called the passage of the budget a watershed moment that balances spending with increased revenue from higher taxes and fees. It was passed by the House just a few hours after details of the spending plan were revealed in a 1,600-page amendment to a shell bill.
“We were prudent and cautious about the investments that we made with an emphasis on economic growth and jobs while making sure that Illinois is living within its means,” Pritzker said Wednesday.
Americans for Prosperity Illinois State Director Andrew Nelms said one of the main cost drivers in the budget is pensions, and there’s been no movement to lower those cost. Payments to the state’s pension system account for a quarter of all spending.
“There has to be a willingness on the part of our elected official to actually address it in a meaningful way instead of actually throwing more money at the problem,” Nelms said.
Pensions will get $9.5 billion. Proposals to change the state constitution’s pension-protection clause to reduce benefits for retirees have gone nowhere at the statehouse.
Pritzker said he doesn’t want to take away anyone’s benefits. The governor said he wants to “better manage” the pension systems.
The state budget includes a 10 percent funding increase for the Department of Children and Family Services. Some of that money will be used to hire more than 300 additional front line personnel for the agency, which has been widely criticized after the child deaths. The Health and Family Services will get an increase of 4 percent from all funds.
Higher education will get a total of $2.4 billion from all state funds, with the Student Assistance Commission getting the most, or $779.6 million, an 8 percent increase from the previous year. Universities are set to see a 5 percent increase across the board. The University of Illinois will get $628.7 million.
The Illinois Department of Transportation will get nearly 20 percent more for a total of $3.6 billion. The additional funds will pay for more employees to undertake capital projects.
The Department of Public Health will get 10 percent more with increased funding for breast and cervical cancer screenings and local health protection grants. There’s also money for safety-net hospitals, vaccines and immunizations, and screenings to detect lead poisoning.
Veterans Affairs will get $21 million more than the previous year, with the bulk, or $20 million, going to finish construction of the Chicago Veterans Home, a project which has been stalled for years. That has a scheduled open date of Spring 2020.
For public safety, the State Fire Marshal will get $6.1 million more for a total of $40.6 million, an increase of 18 percent. That will go to pay for added personnel and new initiatives including small equipment grants. Illinois State Police will get 4.4 percent more than the previous year to help fund two new cadet classes and $5 million to implement the Firearm Dealer Licensing Certification Program.
There are several line items with increases connected to regulating marijuana. The Department of Agriculture will get $500,000 in appropriations to administer the state’s new Industrial Hemp Program and $1.6 million for the Recreational Cannabis Program. The Department of Revenue will see $3.7 million associated with cannabis regulation. ISP will also get nearly $5 million to police adult-use marijuana. The budget also increases funding for the Department of Commerce and Economic Opportunity to the tune of $200.9 million, of which $18 million will be spent for the Cannabis Loan and Grant Program. And Natural Resources will get increased funds for cannabis business development.
While the budget had some bipartisan support, that wasn’t the case for another measure Pritzker signed Wednesday, the progressive tax rates. Pritzker signed those rates, which would only take effect if voters approve a change to the income tax structure through a constitutional amendment on the November 2020 ballot.
“The fair tax is necessary to ensure that we move toward permanently balancing our budgets,” Pritzker said.
Republicans unanimously opposed the rates Pritzker signed Wednesday. They also opposed the constitutional amendment to scrap the flat tax and make way for a progressive income tax. That constitutional amendment passed the legislature and goes to voters next.
“Illinois families should remain very wary on the rates that are being ‘promised’ today – as Democrats will continue to come back, year after year, and pickpocket more money from Illinois families and businesses,” House Minority Leader Jim Durkin said in a statement.
Outside of the realm of state politics, Leonard and Associates Managing Partner Michael Leonard, a tax professional in Oak Park, said a progressive tax could backfire and cause successful businesses to look at other states to expand.
“Whenever you increase tax like that, then there are going to be other things that are cut out. You cut out a lot of the benefits that you want to provide to your employees, you can do that anymore,” Leonard said. “Why would you want to stay in Illinois?”
Leonard said taxpayers, and in particular, businesses, haven’t seen lawmakers be good stewards of state resources.
“Why should somebody who actually practices good business have to suffer for a state that doesn’t practice good business?” Leonard said.
The progressive tax rates Pritzker signed hike income taxes on individuals making $750,000 or more from 4.95 percent to 7.99 percent, but only if voters approve the constitutional amendment in November 2020.
