J.B.’S BUDGET JOY
Gov signs $40.1 billion spending plan, rates for income tax measure
Gov. J.B. Pritzker on Wednesday signed into law his first budget — a $40.1 billion spending plan — alongside a measure that sets the income tax structure should his preferred graduated income tax plan clear a 2020 ballot referendum.
Handing Pritzker a huge political win, the Illinois General Assembly last month approved a constitutional amendment that will ask voters whether they want to change the state’s flat income tax structure and replace it with one in which higher income taxpayers pay more. That resolution did not need Pritzker’s approval.
Calling it “a new era of fiscal stability has arrived in Illinois,” Pritzker signed the budget at a signing ceremony, surrounded by legislators and members of his administration.
“This is a watershed moment for Illinois,” the rookie governor said, crediting Democrats and Republicans alike for passing the budget, although there were no Republicans at the signing. “There are far too many people to thank.”
Pritzker took a victory lap for all the bills passed in the overtime legislative session, including legalization of marijuana, a capital bill and a balanced budget.
“I worked with the General Assembly, and we came together to think big and get big things done,” he said.
The measure he signed on Wednesday included the income tax rates, setting the stage for an amped up public awareness campaign via Pritzker’s dark money group, Think Big Illinois, and the other side of the debate, Ideas Illinois.
In total, Pritzker signed the income tax measure, as well as three budget bills — the operating budget, the revenue for the spending and a budget implementation measure.
And part of that spending plan includes a controversial measure: a cost-of-living $1,600 pay bump for lawmakers.
It took former Republican Gov. Bruce Rauner three years into his term to sign his first full-year budget, amid a war over his legislative agenda and an ensuing and devastating impasse.
“Wow, what a difference a year and a governor makes,” said state Sen. Heather Steans, D-Chicago, who helped shepherd Pritzker’s budget through the Senate.
State Sen. Toi Hutchinson, D-Olympia Fields, stressed that the budget and other bills passed represent what voters told her and the governor they want.
“Our problems are way too big to think small,” she said.
The governor’s office says the budget is both “balanced,” but also will generate a $150 million surplus to help pay down the state’s $6.15 billion backlog.
This year’s budget is $1.14 billion higher due to more payments going to debt, education funding and for services for children, according to an analysis from Senate Democrats. It also includes a $50 million increase in early childhood education from last year’s budget.
For higher education, it provides $52.8 million more for public universities than last year. And it gives an additional $50 million for the Monetary Award Program, or the MAP grant program. In total, $451 million will go towards the program.
The budget makes a full $8.4 billion pension payment, which is about $665 million more than last year. Senate Democrats noted that the state has made its full pension payments without borrowing for seven years in a row, “the longest period of consistent obligation payments in contemporary history.”
The state’s Department of Children and Family Services will get an additional $80 million compared to last year, to hire more staff and caseworkers.
Another budget measure signed into law was pushed by House Republicans and includes reforms requested by the business community. To bring in $80 million and $20 million for local governments, a policy within the measure would ensure that third party sellers, such as those who sell products through online marketplaces like Amazon, are compliant with state laws regarding sales tax.
The reform measure also eliminates the franchise tax, which is a tax on exercising a franchise in Illinois, or for foreign corporations, a tax on doing business in Illinois.
Although the budget bills were passed with some Republican support, not all are on board amid concerns over the reliance on taxation, among other problems.
“Today’s bill signing is a bad day for Illinois taxpayers,” state Rep. David McSweeney, RBarrington Hills, said.
Meanwhile, the income tax measure which the governor signed would tax income between $250,000 and $500,000 at 7.75%. Income from $500,000 to $1 million would be taxed 7.85% and income over $1 million would be taxed 7.99%. The corporate tax rate within the package would also be raised to 7.99 %.
Under current law, all personal income is taxed at 4.95% and corporate income at 7%.
And again, signaling not all are on board with Pritzker’s plan, Illinois House Republican Leader Jim Durkin called the graduated income tax rates “simply the next step to giving Illinois Democrats a blank check for uncontrolled spending for years to come.”
“Illinois families should remain very wary on the rates that are being ‘promised’ today — as Democrats will continue to come back, year after year, and pickpocket more money from Illinois families and businesses,” Durkin said in a statement.