Brushing off concerns of overspending, Pritzker signs $53.1 billion state budget

[June 06, 2024]  By ANDREW ADAMS
JERRY NOWICKI
& HANNAH MEISEL
Capitol News Illinois
[e-mail]

CHICAGO – Gov. JB Pritzker on Wednesday signed the state’s $53.1 billion spending plan for the upcoming fiscal year, the largest in state history.

The signing caps months of work – and tension – among top Democratic leaders in Springfield and within the governor’s office.

Pritzker said Wednesday the budget is a demonstration of “fiscal responsibility," pointing to the $198 million that will head to the state’s “rainy day” fund, bringing it to a record balance of over $2.2 billion. It will also make the full payment into the state’s pension systems that is required by law.

House Speaker Emanuel “Chris” Welch, D-Hillside, and Senate President Don Harmon, D-Oak Park flanked Pritzker at the signing alongside Democrats’ chief budget negotiators in the state’s downtown Chicago office building.

Sen. Elgie Sims, D-Chicago, the lead budget negotiator for the Senate, pointed to several programs that he said will benefit vulnerable Illinoisans, including a tax credit for low-income families and increased wages for those who work with disabled people.

That tax credit will cost $50 million. Qualifying families with children under age 12 will receive a credit of 20 percent of the state’s Earned Income Tax Credit in calendar year 2024 and 40 percent in the following year, which is projected to cost $100 million. Pritzker had proposed such a credit for children up to age three, but lawmakers expanded the credit.

But even some of the budget’s strongest boosters hinted at the contentious process that produced it.

“This, by no means, was an easy budget, but this is a good budget that invests in families all over the state of Illinois,” Rep. Jehan Gordon-Booth, D-Peoria, said Wednesday.

Democrats who control the General Assembly pushed the budget package over the finish line last week after a marathon all-night session in the Illinois House that highlighted internal strife within the majority party.

Upon Pritzker’s signing of the budget, Republicans were quick to criticize it, echoing initial opposition shared last week. The Senate’s top Republican, Sen. John Curran, R-Downers Grove, denounced the budget’s use of state funds to provide health care benefits for noncitizen residents of the state, calling the situation “grossly unfair” in a Wednesday statement.

The budget includes $629 million – including $440 million general funds – for that health care program, as well as $182 million to provide shelter, health care and other services for recently arrived migrants, many of whom have been bused to the state from Texas.

Republicans uniformly voted against the budget package with the exception of a measure that does away with the state’s 1 percent tax on groceries, but even some Democrats balked at the budget and voted against either the spending or revenue plans last week.

Though they ultimately voted for the budget, a few Democrats took time during the Senate’s debate on the budget package to express mild disappointment with spending priorities, saying they wished the state had more resources for youth employment programs and public universities.

But while a trio of Democrats’ ‘no’ votes on the spending and revenue bills had no bearing on the budget’s passage in the Senate, a bloc of opposition in the House nearly derailed its budget vote in the wee hours of the morning last Wednesday.

Amid attendance issues as the night wore on, it took Democratic leaders three tries – and a temporary waiving of the chamber’s own rulebook – to get the minimum 60 votes needed to pass the bill containing new taxes. Earlier in the evening, the spending bill passed by a narrow margin.

During debate over the revenue bill, State Rep. Fred Crespo, D-Hoffman Estates, lamented that leadership didn’t consider spending controls he’d suggested earlier this spring in his role as chair of the House’s committee on appropriations for general services.

Those suggestions included a hiring freeze for state workers and only giving state agencies 95 percent of the funds they said they’d need for the fiscal year – allowing them the opportunity to lobby for the remaining 5 percent next May if the money ended up being truly needed.

He warned about a looming fiscal cliff before voting against the bill, saying, “at this rate, ladies and gentlemen, we're gonna run out of taxpayer dollars to spend.”

Asked about Crespo’s comments for the second time on Wednesday, Pritzker pushed back, claiming “most Democrats” wouldn’t agree with Crespo’s ideas. The governor’s criticism followed social media posts from two of his top deputies aimed at Comptroller Susana Mendoza, who earlier this week told Quincy-based TV station WGEM that she’d have liked to see “perhaps some more cuts across the board.”

The governor also painted Mendoza’s suggestions as more in line with Republicans than the pair’s shared party.

“Well, I want to remind all of you that across-the-board budget cuts – this idea is not an idea that Democrats believe in,” Pritzker said Wednesday. “This idea that you can just go across the board and cut 5 percent of the budget and not have a very deleterious effect on people all across the state.”

Revenues and taxes

While more than $1.1 billion in added revenue was needed to balance the books, the final revenue plan – which Pritzker did not sign on Wednesday but said he planned to without changes – doesn’t include any personal income tax increases for Illinoisans.

The final plan did not slow the increase of the state’s standard deduction, a sum millions of Illinoisans subtract from their taxable income each year. It will grow to $2,775 after lawmakers scrapped Pritzker’s plan to cap it at $2,550.

But businesses claiming previous-year losses on their taxes will be on the hook for another $526 million collectively after lawmakers voted to extend an expiring cap on corporate net operating losses. The cap will actually increase from $100,000 in the current fiscal year to $500,000, but the move is considered revenue-generating because without the change in law, there would be no such cap in place for FY25.

Flanked by the lieutenant governor and legislative leaders, Gov. JB Pritzker signs the $53.1 billion fiscal year 2025 state budget into law after months of negotiations. (Capitol News Illinois photo by Andrew Adams)

Other revenue measures include:

$200 million raised by increasing the tax rate on sportsbooks from 15 percent to a graduated rate of 20 percent to 40 percent based on revenues.

$101 million raised by capping a tax discount claimed by retailers at $1,000 monthly.

$200 million raised by redirecting $150 million from the Road Fund and $50 million from the Leaking Underground Storage Tank Fund to public transit, freeing up that amount in general revenue spending.
$25 million raised by subjecting “re-renters” of hotel rooms to an existing state hotel tax.

$35 million in infrastructure funding raised by increasing the tax on video gambling revenues by one percentage point.

An associated budget bill that is yet to be signed eliminates the state’s grocery tax beginning in 2026, but it gives municipalities the authority to install their own such tax without a referendum to make up for the revenue lost from the state’s tax.

Education

Pritzker’s plan included several increases for K-12 and higher education, including the annual $350 million bump in K-12 education funding, called for by a 2017 law that overhauled Illinois’ school funding formula. Other increases include:

Another $32.7 million increase for transportation and special education reimbursements for schools.

Full funding for Pritzker’s “Smart Start” plan aimed at adding 5,000 preschool seats across the state and providing workforce grants. That includes $75 million in additional Illinois Early
Childhood Block Grant funding, about $200 million to stabilize operational funding for child care providers and $5 million to expand a Department of Human Services home visiting program.

$14 million to launch the newly created Department of Early Childhood, which Pritzker has promised would streamline services currently provided by three different state agencies.

$45 million for a teacher vacancy pilot program to help underserved districts with teacher retention.

A 2 percent – or $30.6 million – increase for community colleges and public universities.

A $10 million increase to Monetary Award Program grants for lower-income college students.

$575 million for deferred maintenance and construction at higher education facilities, including $450 million for universities and $125 million for community colleges.

Health care and human services

The budget also allocated $10 million to erase more than $1 billion in medical debt for an estimated 300,000 Illinoisans through partnership with the nonprofit Undue Medical Debt. House Bill 5290, which has not yet been signed, laid out that applicants must earn 400 percent of the federal poverty level or less. Other health and human services funding include:

A $1 hourly increase for direct service professionals who serve individuals with intellectual and developmental disabilities in community-based settings.

An increase totaling $70 million for Community Care Program workers serving older adults who can’t live independently.

$4 million to create a statewide maternal health plan and distribute grants to community-based reproductive health care providers.

A $70 million increase for safety net hospitals.

A $90 million increase for Home Illinois, a program created last year to address homelessness, bringing total funding to $290 million.

$1 million for a low-income diaper program.

$13 million for the Mental Health Early Action on Campus Act grants – a line-item Pritzker had proposed drastically cutting but lawmakers ultimately funded in full.

$50.3 million to the Department of Children and Family services aimed at increasing staff size by 392 positions and providing “rate reform” for the providers that partner with the state.

State government and infrastructure

The budget included funding for a 5 percent pay hike for lawmakers’ base salary to $93,712, as well as salary increases for constitutional officers, such as the governor, comptroller and treasurer. State law sets the pay for those individuals to increase annually with inflation, and lawmakers took no action to stop it from occurring in FY25. Pritzker, a billionaire, does not take a state salary.

The budget also included $5.3 billion in appropriations and bonding authority for road and bridge projects, with over $3.5 billion in new bonding authority for other infrastructure. Some of that funding includes:

$900 million for renovation at state prisons, including a possible tear down and rebuild of Stateville and Logan Correctional Centers.

$500 million to support the development of a regional quantum information science and technology campus. Another bill allowing the Department of Commerce and Economic Opportunity to designate “quantum campuses” also lays out infrastructure and business incentives to lure developers of new-age higher-speed computing technology to the state.

$157 million for additional funding to support construction of the new Illinois Department of Public Health laboratory in the Chicago area and rehabilitation of the Carbondale laboratory.

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