Gov. J.B. Pritzker is banking on voters approving a constitutional amendment to allow for a progressive income tax in November so $1.4 billion in new tax revenue can be used for the second part of the coming fiscal year.
The governor’s budget doesn’t include any other proposed tax or fee increases. The proposed budget spends $42 billion, 4.1 percent more than the current year. It is the largest proposed budget in state history.
“Last year, we began turning our ship of state in the right direction,” Pritzker said. “Last year, Republicans and Democrats alike rolled up our sleeves, worked out our differences and produced a bipartisan, balanced budget that has begun to put our state back on a sound fiscal path.”
“The budget I propose to you today will build on the steady progress we’ve been making over the last year,” Pritzker said. “Our choices remain hard; our financial situation challenging.”
Illinois has $136 billion in unfunded pension liability. That liability rises to more than $200 billion when state government retiree healthcare costs are included. The state also has more than $7 billion in unpaid bills.
“After years of poor fiscal management, of past leaders lying about how we got here, of scapegoating the wrong people and problems – our constituents deserve some honesty,” Pritzker said. “No amount of wishful thinking will wave away our structural deficit or our pension obligations. No amount of lip service will balance the budget or fund our schools or improve public safety.”
The proposed fiscal 2021 budget set to begin July 1 would increase K-12 funding by $350 million. But that funding hinges on voters approving a proposed progressive income tax at the ballot box in November. If taxpayers don’t approve the constitutional amendment to change the state’s flat income tax to a structure with higher rates on higher earners, nearly $1.4 billion will be held in reserve.
“To address the uncertainty in our revenues, this budget responsibly holds roughly $1.4 billion in reserve until we know the outcome in November,” Pritzker said.
The reserves that wouldn’t be spent if the progressive income tax proposal fails includes $150 million in K-12 spending. A total of more than $307 million in all education funding would be held in reserve, including a proposed 5 percent increase in university and community college spending. There would also be more than $480 million that would be held in reserve from health care and human services and $602 million in public safety money that would be held in reserve.
For the school funding, the evidence-based funding model calls for annual increases of $350 million, but budget officials with the governor’s office said they interpret that as a funding goal. If the progressive tax doesn’t pass, there would only be $200 million more in K-12 spending.
In public safety, budget officials said there would be three new classes of Illinois State Police cadets. If voters don’t approve the progressive income tax, there would only be two classes.
“Even if the graduated income tax does not take effect, our budget nevertheless continues our progress, although at a much slower pace than I think we require to get ourselves out of the hole previous administrations have dug for us,” the governor said. “And if the graduated tax rates do take effect, this budget proposal takes major steps to stabilize our fiscal condition and build on the historic investments and improvements we’ve made across the board to better serve the people of our state.”
Pritzker’s sending plan calls for fully funding payments to the state’s pension systems, at more than $9 billion for all funds. That’s more than 20 percent of the state’s budget. The governor does not plan any re-amortization or bonding to pay for pensions as he proposed last year but it does spend $100 million more on pensions than the statutory obligation, “from the proceeds of the graduated income tax dedicated directly to paying down our pension debt more quickly.”
“We must keep our promises to the retirees who earned their pension benefits and forge a realistic path forward to meet those obligations,” Pritzker said.
Some Republicans have proposed changing the state constitution’s pension protection clause. Pritzker said that wasn’t the answer.
“The idea that all of this can be fixed with a single silver bullet ignores the protracted legal battle that will ultimately run headlong into the Contracts Clause of the U.S. Constitution,” Pritzker said. “This is not a political football.”
The Budget Stabilization Fund, commonly called the state’s rainy day fund, would get an infusion of $50 million, something the governor said he wanted to do on an annual basis. Right now the fund has $3.5 million. It had $226 million back in 2001, budget officials said.
“It’s been more than a decade since the last contribution was made to the Rainy Day Fund, and it was almost entirely wiped out in 2017 under my predecessor,” Pritzker said.
Cannabis taxes are new this year and the governor’s budget will use $46 million in the coming fiscal year. Of that, $10 million will go to pay down the state’s backlog of bills. Twenty-five percent of the revenue will go to community based programming and nonprofit groups.
The proposed budget also calls for increasing funding for the Monetary Award Program for college tuition assistance. It also includes funding to provide tuition for students whose families make less than $67,000 a year.
The governor also called for a new program, the Safe2Help Illinois tip line for confidential reporting of bullying, intimidation or violence in schools. That is expected to cost about $2 million.
Pritzker wants to spend $4.5 million to bring back a navigator program eliminated by President Donald Trump’s administration. The program helps people find health insurance coverage from the federal insurance marketplace.
The governor had previously said he planned to increase funding for the Department of Children and Family Services by nearly $150 million. That would include hiring 150 additional employees.
“Our future will not be built on the shaky rhetorical foundation of those who keep rooting for us to fail,” Pritzker said. “Every decision we make about how we spend the money our citizens trust to our keeping is, at its root, a deeply moral undertaking.”
The budget does not include spending from the $45 billion, multi-year capital construction plan. That’s paid for with tax and fee increases passed last year.
-
Greg Bishop
Staff Reporter
About Post Author
