Governor focuses on COVID, tough choices in $41.6 billion budget

Governor J.B. Pritzker giving the state's budget address from the Illinois State Fairgrounds. (Photo: illinois.gov)

From the Orr Building on the Illinois State Fairgrounds Wednesday, Gov. J.B. Pritzker outlined “one of the most challenging budgets” and connected COVID circumstances to the fairgrounds’ emergency role during the 1918 Spanish flu epidemic.

The COVID impact featured prominently throughout the governor’s budget speech as he reported how Illinois has distributed vaccines, spent federal CARES Act dollars on small business grants and sought to support families with housing assistance and childcare facility grants.

“This pandemic isn’t over yet, so that remains our guiding light for this fiscal 2022 budget proposal,” the governor said. “Every single day of the last year I’ve felt the weight of what I’ve asked you to sacrifice as COVID threatened your lives and livelihoods. I want you to know that.”

Pritzker pointed out he took executive action to cut $700 million in spending from the current budget. The governor reported his proposed budget reduces general revenue fund spending for fiscal year 2022 by $1.8 billion compared to FY2021. He proposed to cut another $400 million from appropriations, institute a hiring freeze and flat operational spending, proposes full required pension payments, and closing “unaffordable corporate loopholes.” The details of the proposed closures contain nine different tax incentives, of which accelerating the expiration of the biodiesel sales tax incentive is one. Pritzker emphasized, “This budget does not propose an across-the-board tax increase.”

He challenged the General Assembly to pass this year a $60 million stand-alone bill for the Department of Employment Security that faces “unprecedented demand,” and he wants lawmakers’ support to add $73 million for the unemployment system in the new budget.

The governor pointed to the state’s investment of $275 million in Business Interruption Grants to more than 9,000 small businesses. “That’s why we propose setting aside a share of new federal dollars for those grants to small businesses,” he added.

As for school funding, Pritzker projected no schools would have to reduce spending under his proposed budget, despite not funding the additional $350 million called for the in states school funding formula for FY 22. The federal government has allocated $2.8 billion to support schools thus far and more is expected, according to the governor. “Thanks to this funding, we can protect our K-12 investments at current spending levels,” Pritzker added.

The governor said his budget protects higher education funding. He noted federal COVID relief funding will provide $740 million to post-secondary institutions in the state, so he is proposing a $28 million increase in the monetary award program “for those smart kids who can least afford it.”

The governor fleetingly acknowledged the state’s $4.76 billion in unpaid bills, which are expected to grow to more than $10 billion by June. Essentially, he challenged Congress to return an equal amount of tax dollars paid by Illinois residents, but acknowledged that won’t solve the state’s fiscal challenges. “That’s why any money we receive from the federal government needs to be spent wisely, by paying down borrowing and our bill backlog. Anything remaining must be used to invest in expanding jobs and economic growth,” Pritzker said.

Illinois Farm Bureau President Richard Guebert Jr. agreed with the governor’s statement that the FY2022 budget “will be one of the most challenging budgets this government has ever had to craft.” IFB welcomed Pritzker’s comments that he wants to “enter the process of negotiation with an open mind,” Guebert continued.

As for some of the governor’s proposals, Senate President Don Harmon, D-Oak Park, said, “It’s a fair question to ask, ‘What are the hard-working taxpayers of Illinois getting in return for these corporate tax breaks?’ It’s probably past time to put some of these incentives under the microscope and see what works and get rid of what doesn’t.”

But House Minority Leader Jim Durkin, R-Western Springs, questioned Pritzker’s characterization of a data tax center incentive “already being used successfully,” the Blue Collar Jobs Act that provides tax credits for wages on construction projects and the Invest in Kids Act, a scholarship tax credit program passed in 2017. “None of these items are loopholes. They are incentives to grow jobs and educate our children. They do exactly what this governor and previous governors intended them to do,” Durkin said.

Guebert noted the governor’s call to close business tax incentives and a specific item accelerating the expiration of the biodiesel sales tax incentive. “The current biodiesel sales tax incentive is scheduled to sunset Dec. 31, 2023, but a plan to reform the biodiesel sales tax incentive, which IFB supports has already been introduced in HB 229 (at the request of the Illinois Soybean Association),” he said.

“We accept the governor’s call to work together,” Guebert continued, “and we are hopeful that any changes that will be made will be to continue the recognition of the importance of this fuel for the growers of soybeans and the impact that has on the state’s overall economy.”