Pritzker seeks clarity on use of federal funds for debts as industries call to keep tax incentives in place

[May 13, 2021]  By Greg Bishop

(The Center Square) – How the state can use federal tax dollars to pay off debts incurred during the pandemic still isn’t clear, but the governor says he and other Illinois leaders are holding out for rule changes.

This while industries point to better-than-expected revenues as a reason for the governor to drop his bid to slash or end tax incentives to capture nearly $1 billion more in revenue.

Federal guidance released this week for how state and local governments can use $350 billion of federal tax funds says the money can’t be used for debt service.

Gov. J.B. Pritzker on Wednesday questioned that, as the state borrowed billions in federal funds during the pandemic.

“Look, the federal government is sending us dollars and then telling us that we can’t then send those dollars back to the federal government to pay for the borrowing that we took out last year clearly doesn't make a lot of sense, and so we’ve talked with the [U.S.] Treasury Department about that,” Pritzker said.

He reiterated he and others are committed to paying back the debt incurred during the pandemic.

The state is in line to get nearly $8 billion from federal taxpayers over two years from the American Rescue Plan enacted earlier this year.

Meanwhile, a bipartisan statehouse commission revised its revenue estimates up more than $2 billion in the current fiscal year and more than $790 million for the coming fiscal year.

Some, like the Illinois Manufacturers Association, say that means the governor should drop his push to close or limit tax incentive programs to the tune of nearly $1 billion.

“In light of record revenue growth and billions of dollars in federal stimulus, there is no need to raise taxes on Illinois job creators that will only serve to constrain job growth and limit economic investment in the state,” said IMA’s Mark Denzler. “As we emerge from the pandemic, the Governor should be looking at ways to help the business community rather than harm them.”

Jack Lavin, with the Chicagoland Chamber of Commerce, is advocating the extension of the film tax credit that Pritzker is also advocating for. But, Lavin said if the governor cuts or limits other tax incentive programs on the chopping block, that will hurt the economy, especially during a pandemic.

“There’s only so much money that’s gonna come out of Washington D.C. to help us, what happens when that dries up?” Lavin told WMAY. “We have to have these kinds of tax credits that are helping invest in jobs, create jobs, jobs you can raise a family on.”

Josh Sharp, with the Illinois Fuel and Retail Association, said with the better-than-expected revenues reported, Pritzker should find revenue elsewhere.

“This industry has already been exceptionally hard hit by the sudden doubling of the state’s gas tax a few years ago,” Sharp said. “We have other business issues in this state which make it very uncompetitive for my members to operate.”

Pritzker is eying a list of tax credits to close or limit like the Blue Collar Jobs Act and tax credits for biodiesel.