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llinois Gov. J.B. Pritzker delivers his State of the State and budget address before the General Assembly at the Illinois State Capitol, Wednesday, Feb. 21, 2024, in Springfield, Ill.

llinois Gov. J.B. Pritzker delivers his State of the State and budget address before the General Assembly at the Illinois State Capitol, Wednesday, Feb. 21, 2024, in Springfield, Ill.

Brian Cassella

Gov. JB Pritzker’s ‘more austere’ $52.7 billion budget proposal revamps pension system

SPRINGFIELD — Gov. J.B. Pritzker on Wednesday unveiled a $52.7 billion budget that includes the blueprint for a pension overhaul, funding to care for newly arriving migrants and the creation of a child tax credit.

While calling the state’s financial future “bright,” the Democratic governor’s sixth spending plan of his tenure leans on large corporations and lucrative casino sportsbooks that could face a collective tax hike of more than $800 million.

Those proposed hikes were not mentioned in the governor’s 52-minute joint State of the State and budget address before the Illinois General Assembly.

Instead, Pritzker focused on some of his key priorities, including early education, social services and healthcare. He defended the state’s response to the migrant crisis — while also railing against former President Trump — and the state’s Republican Congressional delegation — for rejecting an immigration bill that would have revamped the country’s border policies and helped Illinois.

“Listen, maybe some of you think we should just say, ‘This is not our problem,’ and that we should let the migrant families starve or freeze to death. But that’s not what decent Midwesterners do. That’s not what leaders do,” Pritzker said. “We didn’t ask for this manufactured crisis. But we must deal with it all the same.”

The Democratic governor, who also serves as a key surrogate for President Biden’s reelection campaign, also acknowledged “our immigration system has been broken for a long time.”

“No doubt, the current migrant crisis is a problem of the federal government’s making, and I mean both political parties,” the governor said.

Some Republicans groaned when Pritzker called Biden a “very good president who has rescued the economy and protected freedom.”

The governor is projecting a 1.5% increase in state revenues for the new fiscal year, which begins on July 1, for a haul of nearly $53 billion. That’s largely due to the $800 million plus in tax increases mostly targeting large businesses.

Pritkzer’s plan continues to limit the amount of operating corporations can write off on their income taxes, capped at $500,000 starting next year. That change would generate another $526 million for the state, his office estimates.

The governor also wants to more than double the state tax on sports betting revenue collected by sportsbooks from 15% to 35%, a proposal that’s sure to draw pushback from a rapidly expanding industry that raked in more than $1 billion in 2023. The governor’s team predicts such a hike could pump an additional $200 million into state coffers.

And he wants to lower the tax discount retailers receive for collecting sales tax, a measure his office says would net the state an additional $101 million.

The plan also includes transferring mass transit costs from sales tax to the state’s Road Fund, to take in an additional $175 million.

Pritzker’s budget team is aiming to hasten the state’s pension funding ramp with an eye toward landing another credit upgradefrom Wall Street ratings agencies.

Since 1994, the state has been on a slog toward filling the gap in the grossly underfunded system to 90% by 2045. Pritzker’s team is adjusting that goal to reach 100% funding by 2048 — closer to pension goals set by many other states.

The governor’s team says they can make that happen in part with savings from paying off two other major bonds issued by the state over the next decade. Pritzker will need legislative approval for the pension proposal.

The $52.7 billion in spending amounts to an increase of about 2% compared to last year’s plan. Officials on Wednesday morning called the plan a “more austere budget than in recent years” — which also maintains a promise of fiscal responsibility.

There will undoubtedly be sticking points for some of the governor’s priorities, however, including funding for migrants and the health care costs for the undocumented.

The governor’s budget includes funds for some of his top priorities, including $181.7 million to continue to fund the migrant crisis, and $629 million to continue providing health care benefits to undocumented people aged 42 and up who would otherwise qualify for Medicaid.

Those two issues are likely to create some tension within the Republican caucuses.

Education funding would include $350 million towards the state’s school funding formula — although advocates have been warning they would put up a fight for more than that statutory yearly funding requirement. The total K-12 funding under the governor’s proposal totals $10.8 billion in general funds.

The governor proposed a much more modest increase in funding for state grants for low-income college students than in previous years. Last year he secured a $100 million increase for the Monetary Award Program, or MAP grant, and this year advocates had called on him to request $50 million more. But he’s asked lawmakers to approve just $10 million more for the state financial aid program, which would bring total funding for MAP grants to $711 million.

The proposed budget creates a $12 million child tax credit for lower-income families with children under age 3, for a credit of about 20% of the taxpayer’s state earned income.

The spending plan sets aside $175 million for the state’s “rainy day” fund, an emergency piggy bank that has gone from nearly insolvent in 2017 to $2.3 billion by next year, if passed by the General Assembly.

The budget also includes $10 million in federal funds to erase $1 billion in medical debt for Illinois residents — the first in a three-year plan.

Budget negotiations are expected to continue through the end of May, the deadline for lawmakers to pass a spending plan.

Contributing: Lisa Kurian Philip, WBEZ

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