Gov. Pritzker Delivers Budget Address

Last Wednesday at Noon, Gov. JB Pritzkerdelivered his first Budget Address in which he laid out his priorities for the Illinois Fiscal Year 2020 budget. Plenty of new spending was proposed.

The Administration is assuming a General Revenue Funds (GRF) budget of $38.75 billion on revenues of $38.9 billion. If all sources are included (e.g., Federal funds), the size of the proposed budget is $77 billion. The GRF proposal is a 4% increase over the current fiscal year budget.

New spending totaling at least $4.6 billion is proposed for early childhood programs ($140.8 million), K-12 education ($382.25 million), higher education ($161.4 million), health and human service programs ($437.85 million), criminal justice reforms ($10 million), public safety ($108.8 million), and infrastructure ($3.37 billion).

Pritzker proposed more than $1.1 billion in new revenues and claimed that if these revenues were not approved GRF spending would have to be cut 4% excluding employee healthcare, pensions, and debt service costs. The proposed revenue increases include:

  • Capping the Retail Discount/Vendor Collection Allowance at $1,000. This is a significant hit to retailers and shifts even more of the cost of administering the sales tax on behalf of state and local government onto the backs of retailers ($70 million estimated);
  • Taxing e-cigarettes at 36% ($10 million estimated);
  • Increasing the cigarette tax by $0.32 per pack/$3.20 per carton to $2.30 per pack/$23.00 per carton ($55 million estimated);
  • Imposing a plastic bag tax – if it does not contain an allowance for retailers, it would be the first bag tax of its kind to ignore the extra costs imposed on retailers ($20 million estimated);
  • Placing an assessment on Managed Care Organizations ($390 million estimated);
  • Creating a progressive tax structure for video gaming ($89 million estimated);
  • Decoupling from the Federal Tax Credit for Repatriated Corporate Income ($94 million estimated);
  • Enacting sports wagering ($212 million estimated);
  • Enacting recreational cannabis ($170 million estimated); and
  • Enacting tax amnesty ($175 million estimated).

 

On the pension front, the most serious financial crisis confronting Illinois, the Governor proposed extending the current ramp by an additional seven years, to 2052, thereby avoiding an $878 billion pension payment. Additionally, the proposal includes an additional $2 billion in new pension bonds as well as extending the current buyout program.

In terms of infrastructure, the Governor is proposing more than $2 billion, including a pay-as-you-go program for roads.

This begins the budget discussions in earnest expected to result in a budget on or before May 31. The budget may be balanced but does not address the bill backlog.

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