Democrats Reach Budget Deal
House Speaker Chris Welch speaks during a news conference Thursday afternoon as Democrats announce a deal on a state budget which includes $1.8 billion in mostly temporary tax breaks. Governor JB Pritzker and Senate President Don Harmon look on.
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More than 90% of Illinois families will receive direct cash payments, grocery and gasoline taxes will be cut, and local governments will receive more funding in a budget deal announced by Governor JB Pritzker and the two legislative leaders Thursday afternoon.
Pritzker, House Democrats, and Senate Democrats had all introduced competing tax plans to provide some level of relief from high gas prices and increased costs due to inflation.
With about 15 minutes notice Thursday afternoon, Pritzker, House Speaker Chris Welch and Senate President Don Harmon held a news conference announcing a deal on a final budget and tax relief package.
The leaders say the deal includes $1.8 billion in tax relief for families across the state. That includes Pritzker’s original proposal to freeze the automatic motor fuel tax increase in July for six months, totaling two cents per gallon, but Democrats estimate it will save consumers $70 million over that 6 month period.
The bill also cuts the sales tax on groceries for a year, which would provide about $400 million in savings for consumers. It also doubles the property tax rebate to a maximum of $300 per household.
The most notable part of the budget would be providing direct checks to individuals. Families would receive $50 per individual and $100 per child, up to three children. So, a family of four would receive $300 automatically if they file a tax return this month.
Income limits are $200,000 for individuals and $400,000 for joint filers. A spokesman for Senate President Don Harmon says more than 90% of taxpayers in the state will be eligible for the direct payments.
The bill also expands the earned income tax credit to the tune of about $100 million and another $50 million in back to school tax relief, most likely in the form of a back to school sales tax holiday.
“Over the last few weeks, especially over the last 48 hours, we have engaged in a true give-and-take, which led to genuine compromise,” Pritzker said. “It honestly felt that we all came into this process committed to a fiscally responsible spending plan that improves our state’s finances and helps people in an hour of genuine need.”
The budget also includes $1 billion into the state’s rainy day fund which has essentially been arid for many years, essentially dating back to the Blagojevich administration.
While we’re waiting for final bill language to come out, it also appears local governments will receive a boost in their share of state tax dollars. After a major cut in 2017, the Local Government Distributive Fund (LGDF) sends 6.06% of state revenue back to cities and counties. We’re told there will be a slight increase in the share, potentially to around 6.18%, but not the 8% municipalities wanted.
“At least it’s moving in the right direction,” one downstate mayor told me last night.
Republicans were critical of the Democratic plan. Senate Republican Leader Dan McConchie (R-Hawthorn Woods) said the plan relies too much on short term fixes instead of long term tax relief.
“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,” McConchie said in a statement last night. “Additionally, we are significantly increasing government spending. Evidently, they think they know how to better spend your money better than you do.”
The most recent report from the Commission on Government Forecasting and Accountability (COGFA) estimates revenue of $46.3 billion in the fiscal year that begins July 1. Governor Pritzker’s initial budget proposal was around $45 billion and a House proposal earlier this week spent around $47.4 billion.
Rep. Mark Batinick (R-Plainfield), the second ranking Republican in the House, says the proposal does a poor job of preparing for long term revenue decreases.
“This isn’t a triumph of good management. The state is simply experiencing an inflation-induced sugar high,” Batinick said in a statement. “When the state crashes we will still have the same problems, but without the federal funds to bail us out. No structural changes have been made. No permanent property tax relief has been extended, and no regulatory relief has been implemented. Eventually, the pressures of inflation will catch up to the expense side of the ledger. There are storm clouds on the horizon.”
As of Friday morning, no budget bill had been filed in either the House or Senate.