Illinois Democrats announce a budget deal offering more than $1.8 billion in tax relief
Gov. JB Pritzker and Democratic legislative leaders struck a state budget deal Thursday that provides more than $1.8 billion in tax relief to inflation-weary Illinoisans, handing the party what it hopes will be a potent message of empathy and fiscal solvency heading into fall campaigns.
The deal was announced late Thursday afternoon by Pritzker, House Speaker Emanuel “Chris” Welch, D-Hillside, and Senate President Don Harmon, D-Oak Park, and is expected to be voted on Friday, when lawmakers are scheduled to conclude their spring legislative session.
“I’m not sure how far back in Illinois’ contentious budget-making history you would have to go to find a process and a product quite as good as this one,” the governor said. “But I think it’s a tremendous example of what can be accomplished with responsible, Democratic leadership.
“I hope it will provide a light of hope and help for our citizens in the months to come,” Pritzker said.
The $46 billion-plus spending plan was portrayed as a partial antidote to skyrocketing inflation, which topped 7% in Chicago in February, a rate nearly six times greater than where inflation stood one year ago.
“These are pressures that people are feeling, at the gas pump, at the grocery checkout line, they’re feeling them really everywhere that they go,” the governor said at a hastily called press conference outside his Springfield office to announce the agreement. “That’s one of the reasons that we’re providing the significant tax relief that we’ve got in our plan.”
Under the Democrats’ plan, the state’s 1% tax on groceries will be suspended for one year. A planned increase in the state motor fuel tax that was due to take effect in July will be put off for six months. And homeowners will be getting property tax rebates worth up to $300 per household.
The agreement also calls for the permanent expansion of the state’s Earned Income Tax Credit, with plans to send out checks to those eligible for that tax credit. The checks will be $50 per individual and $100 per child, up to three children per family.
Additionally, a temporary state sales tax holiday on school-related expenses is part of the plan.
All told, the tax relief being served up to Illinoisans totals $1.83 billion, which is a stunning turnaround from where Illinois was just five years ago under Republican Gov. Bruce Rauner, who presided over a two-year budget impasse.
The inability to pass a budget led to repeated credit downgrades for Illinois and caused the state’s unpaid bills to balloon to nearly $17 billion, a record in fiscal futility by a state not known for its bean-counting traditions.
The newly-minted budget deal also stands in marked contrast to the gloomy financial story Pritzker himself was telling about Illinois less than two years ago, when he was trying to sell voters on passing a graduated income tax constitutional amendment.
“A year and a half ago, Gov. Pritzker was threatening Illinois voters with draconian cuts or across-the-board tax increases unless they approved his $3.4 billion tax increase amendment, but voters said no,” said state Rep. Tom Demmer, R-Dixon, the House Republicans’ top budget expert and a GOP candidate for state treasurer.
“Now, as Gov. Pritzker is running for re-election, he’s used the avalanche of federal bailout cash to paint a rosy picture of the state budget,” Demmer said.
About $8 billion in federal pandemic relief dollars flooded into Illinois for state and local governments and for schools, but that funding typically had strings attached such that expenditures had to have some relationship with the fight against COVID-19.
Separate of that pandemic funding spigot, the state’s finances have been on a dramatic upswing, which has made the array of tax giveaways possible. State income and sales tax revenues — the two main sources of funding for the state budget — have skyrocketed, and a recent report by the budget-forecasting arm of the General Assembly showed state revenues up by $2.9 billion compared to a year ago.
The agreement also sets aside $1 billion for a budget stabilization fund, pumps $500 million more than required for state pension payments and delivers more than $200 million more than the governor proposed in February for public safety measures.
Democrats control the House and Senate with supermajorities, meaning the agreement is effectively a done deal. Republicans don’t have the numbers in either legislative chamber to mount an effective bid to kill the budget plan.
Senate Minority Leader Dan McConchie, R-Hawthorn Woods, blasted the agreement.
“What is most unfortunate about the Democrats’ budget plan is we have an opportunity right now to provide permanent tax relief for the people of Illinois, yet instead, the Democrats are choosing to provide one-time checks and other temporary relief just before the election which expires right after the election,” he said.
“Additionally, we are significantly increasing government spending,” McConchie continued. “Evidently, they think they know how to better spend your money…than you do.”
But the Democratic House speaker said he believes inflation-weary residents of the state will gladly accept what Springfield is about to offer them.
“When this budget passes, the governor and the Legislature will be saying, ‘Illinoisans, we hear you,’ ” Welch told reporters.
Dave McKinney covers Illinois politics and government for WBEZ. Follow him on Twitter @davemckinney.