SPRINGFIELD, Ill. — Gov. J.B. Pritzker on Wednesday unveiled a $52.7 billion budget that includes the blueprint for a pension overhaul, funding to care for newly arriving migrants and the creation of a child tax credit.
While calling the state’s financial future “bright,” the sixth spending plan of the Democratic governor’s tenure leans on large corporations and lucrative casino sportsbooks to churn out more than $800 million in revenue for the state.
Those proposals were not mentioned in the governor’s 52-minute joint State of the State and budget address before the Illinois General Assembly.
Instead, Pritzker focused on some of his key priorities, including early education, social services and healthcare. He defended the state’s response to the migrant crisis — while also railing against former President Trump — and the state’s Republican Congressional delegation — for rejecting an immigration bill that would have revamped the country’s border policies and helped Illinois.
“Listen, maybe some of you think we should just say, ‘This is not our problem,’ and that we should let the migrant families starve or freeze to death. But that’s not what decent Midwesterners do. That’s not what leaders do,” Pritzker said. “We didn’t ask for this manufactured crisis. But we must deal with it all the same.”
The Democratic governor, who also serves as a key surrogate for President Biden’s reelection campaign, also acknowledged “our immigration system has been broken for a long time.”
“No doubt, the current migrant crisis is a problem of the federal government’s making, and I mean both political parties,” the governor said.
Some Republicans groaned when Pritzker called Biden a “very good president who has rescued the economy and protected freedom.”
The governor is projecting a 1.5% increase in state revenues for the new fiscal year, which begins on July 1, for a haul of nearly $53 billion. That’s largely due to the $800 million plus in tax increases mostly targeting large businesses.
What are Metro East lawmakers saying?
Rep. Jay Hoffman, D-Swansea, said he sees the governor’s proposal as merely laying out the state’s priorities as lawmakers negotiate the budget over the rest of the session.
Hoffman, also the assistant majority leader, said he appreciates the governor’s continued support of public education. “I think ensuring that we have a good quality education system in Illinois — whether that’s K-12, or trade schools or colleges — is something that has surely paid dividends,” he said.
Fellow Metro East State Rep. Katie Stuart, D-Edwardsville, echoed Hoffman’s sentiment.
Specifically, she said she appreciated a state program that provided targeted funds for 170 school districts that have the greatest need to fill teaching positions. Pritzker proposed lawmakers earmark $45 million for the program in the upcoming fiscal year.
“I think my superintendents and principals and others will especially be happy,” Stuart said. “I think even just everybody who just sends their kids to school every day wants a highly qualified person in that classroom. And building that pipeline is really important.”
However, local Republicans struck a different tone following the governor’s address — mainly regarding the state’s finances.
In November, government forecasters predicted the state would be on pace for a near-$900 million deficit next year. While the state may be in a better position financially than it was under previous gubernatorial administrations, there needs to be a healthy level of concern, said Rep. Amy Elk, R-Godfrey.
“I’m cautious,” said Elik, who also noted that she’s an accountant. “I’m going to always be really cautious, and I’m going to be really careful when it comes to spending. I just don’t see that in this budget — that care and concern.”
To cut spending by the state, Elik and her fellow GOP colleagues said state programs that provide healthcare to migrants without U.S. citizenship and efforts to fund the state response to migrants in Chicago would be top of mind.
“The people that we represent throughout the state don’t appreciate their tax dollars being spent on enticing undocumented immigrants to come to Illinois for housing, Cadillac healthcare and other benefits,” Elik said.
However, not all of Pritzker’s proposals received rebuke from Republicans.
GOP lawmakers said they largely supported the education proposals. Also, Pritzker proposed eliminating the state’s 1% grocery tax. That’s welcome news to Elik and Rep. C.D. Davidsmeyer, R-Murrayville.
“In the grand scheme of things, it’s probably a drop in the bucket, but getting rid of the grocery tax was a great step in the right direction,” Davidsmeyer said.
Raising taxes on betting and big business
Pritkzer’s plan extends a limit on the amount of operational losses corporations can write off on their income taxes. A $100,000 cap that was slated to expire at the end of the year would be extended three years, under the plan from Pritzker's team, which aims to soften that blow on businesses by upping that cap to $500,000. The maneuver would generate another $526 million for the state, the governor's office estimates.
The governor also wants to more than double the state tax on sports betting revenue collected by sportsbooks from 15% to 35%, a proposal that’s sure to draw pushback from a rapidly expanding industry that raked in more than $1 billion in 2023. The governor’s team predicts such a hike could pump an additional $200 million into state coffers.
And he wants to lower the tax discount retailers receive for collecting sales tax, a measure his office says would net the state an additional $101 million.
The plan also includes transferring mass transit costs from sales tax to the state’s Road Fund, to take in an additional $175 million.
Pritzker’s budget team is aiming to hasten the state’s pension funding ramp with an eye toward landing another credit upgrade from Wall Street rating agencies.
Since 1994, the state has been on a slog toward filling the gap in the grossly underfunded system to 90% by 2045. Pritzker’s team is adjusting that goal to reach 100% funding by 2048 — closer to pension goals set by many other states.
The governor’s team says they can make that happen in part with savings from paying off two other major bonds issued by the state over the next decade. Pritzker will need legislative approval for the pension proposal.
The $52.7 billion in spending amounts to an increase of about 2% compared to last year’s plan. Officials on Wednesday morning called the plan a “more austere budget than in recent years” — which also maintains a promise of fiscal responsibility.
There will undoubtedly be sticking points for some of the governor’s priorities, however, including funding for migrants and the health care costs for the undocumented.
The governor’s budget includes funds for some of his top priorities, including $181.7 million to continue to fund the migrant crisis, and $629 million to continue providing healthcare benefits to undocumented people aged 42 and up who would otherwise qualify for Medicaid.
Those issues drew swift rebukes from Republicans.
Illinois Senate Minority Leader John Curran, R-Downers Grove, argued Pritzker "just proposed raising taxes on every Illinois family struggling to make ends meet to fund the non-citizen welfare state he created.
"We have made it clear that the citizens of this state are our priority, while today, the Governor made it clear they’re his piggy bank. Our focus will remain on providing meaningful financial relief to the people of Illinois," Curran said in a statement.
Education funding would include $350 million towards the state’s school funding formula — although advocates have been warning they would put up a fight for more than that statutory yearly funding requirement. The total K-12 funding under the governor’s proposal totals $10.8 billion in general funds.
The governor proposed a much more modest increase in funding for state grants for low-income college students than in previous years. Last year he secured a $100 million increase for the Monetary Award Program, or MAP grant, and this year advocates had called on him to request $50 million more. But he's asked lawmakers to approve just $10 million more for the state financial aid program, which would bring total funding for MAP grants to $711 million.
The proposed budget creates a $12 million child tax credit for lower-income families with children under age 3, for a credit of about 20% of the taxpayer’s state earned income.
The spending plan sets aside $175 million for the state’s “rainy day” fund, an emergency piggy bank that has gone from nearly insolvent in 2017 to $2.3 billion by next year, if passed by the General Assembly.
The budget also includes $10 million in federal funds to erase $1 billion in medical debt for Illinois residents — the first in a three-year plan.
Budget negotiations are expected to continue through the end of May, the deadline for lawmakers to pass a spending plan.
WBEZ's Lisa Kurian Philip contributed to this report.
