Give Gov. J.B. Pritzker some credit, the man can give a good speech.
Last week’s budget address was well-written and respectful of its audience and effectively used Illinois history to make its points. The governor delivered the address like … well … a governor. Unlike some previous occupants of that office, he didn’t try to make himself look better at the General Assembly’s expense. He didn’t propose totally outrageous revenue or spending ideas that had zero chance of passage.
In other words, it was one of the more effective budget addresses I’ve seen since perhaps George Ryan was in office – the last governor who (love him or hate him) actually knew how to get things done.
But speeches, in the end, are just words. What matters most about a budget address is what’s actually in the budget. And it seemed to me like the governor may have oversold the doom and gloom during the past couple of weeks by warning of a $3.2 billion deficit. Pritzker did utter the word “austere,” but focused mainly on how he planned to spend hundreds and hundreds of millions of dollars on programs near to his heart.
The coming year’s pension “holiday” is bigger than initially advertised – $878 million versus the $800 million figure previously floated by the governor’s office. And they’re looking at $390 million for an “assessment” on managed care organizations for Medicaid programs.
Pritzker wants to reduce interfund borrowing repayments by $315 million, incentivize the payment of delinquent taxes for an estimated $175 million, decouple from the federal repatriation tax cut to bring in $94 million, slap a progressive tax structure on video gaming to bring in $89 million and cap the amount retailers can keep from collecting the sales tax to $1,000 a month to bring in another $75 million.
Licensing fees for sports wagering and recreational cannabis would bring in $212 million and $170 million, respectively. He didn’t book any usage tax revenues.
There were some surprises. We knew Pritzker would ask to impose an e-cigarette tax to bring in $10 million, but we didn’t know he wanted to increase the cigarette tax by 30 cents a pack to bring in $55 million. Revenues from both taxes will be used for Medicaid spending.
We also hadn’t heard about a potentially controversial plastic bag tax that will supposedly bring in $20 million. Between the minimum wage hike, the retailer sales tax discount cap and the plastic bag and two cigarette-related taxes, Pritzker may make it even more difficult for the Illinois Retail Merchants Association to justify working with him after being the only business organization not to endorse Bruce Rauner last year.
The governor’s revenue projections for both this fiscal year and next are a combined $1.4 billion higher than the previous administration’s admittedly gloomy forecast, but that includes the $1.1 billion in additional revenues from his tax and fee list.
Pritzker’s projected expenditures for this fiscal year and next are a combined $660 million lower than Rauner’s, and that’s mainly because of the pension payment “holiday.”
You have to look hard to find proposed program cuts, but they do exist. Not many, but some. There’s a million-dollar cut to expenses for the Park and Conservation Program, for example. School district consolidation incentives are reduced by $1.5 million. A $4.6 million grant to the RTA for paratransit is eliminated. The Department of Natural Resources will see a 1.2 percent reduction because of a cut in Other State Funds that’s partially offset by new federal money.
But the expansions vastly outweigh the cuts. Most have already been widely reported, but the highest percentage increase is for the governor’s own office, at 155 percent. The state has a new law that for the first time ever requires all employees of the governor’s office to be paid out of his office’s budget, not offshored to other state agencies. For decades, governors have used offshoring to mask the actual costs of operating their offices by putting their staff on other agencies’ payrolls. So, while eye-popping, it’s reasonable.
And while universities are receiving a 5 percent increase in operating assistance, the total appropriation is still just 96.4 percent of what they were appropriated in the Fiscal Year 2015 budget – the last one approved before the two-year impasse began. That’s perhaps the best illustration in the entire budget about how far the state has to go to repair the damage caused during Gov. Rauner’s tenure – not to even mention the damage from the previous 15 years.
- wordslinger - Monday, Feb 25, 19 @ 9:27 am:
It’s going to be a long slog. Producing a budget is difficult when your intention is to actually produce one, and not just go full deadbeat on contracted services, community colleges and public universities.
- Anonymous - Monday, Feb 25, 19 @ 9:29 am:
No Governor Ogilvie here. Addressing the fundamental problems is tough and boring. But it does demonstrate true leadership. Too bad seems to be missing once again..
- Perrid - Monday, Feb 25, 19 @ 9:33 am:
I get you put holiday in quotes, but I see a difference between Blago keeping the same schedule and just not making the payments, and JB proposing we change the schedule, meaning we make more, smaller, payments.
- Wylie Coyote - Monday, Feb 25, 19 @ 9:37 am:
I see a subliminal ad for Cascade dishwasher detergent was inserted into your column.
- Grandson of Man - Monday, Feb 25, 19 @ 9:38 am:
I agree with Pritzker’s willingness to wait for a graduated income tax—if the calculation is based on a real possibility of the CA passing the House. Who will be the reluctant Democrats this time around, some or all of those who didn’t vote for the minimum wage hike?
Pritzker has put some pressure on the GA, to legalize marijuana and sports betting. Legal marijuana’s bill sponsors are reportedly waiting for the results of a study, and revenue is not the stated primary reason for wanting to legalize.
I don’t want to see a flat state income tax hike as a first option—and by the way, nobody cares about tax cuts more than I do, okay? Believe me. We need structural reform and have a chance to do it, perhaps the best chance yet with 74 House Democrats.
- Lester Holt’s Mustache - Monday, Feb 25, 19 @ 9:48 am:
Yeah I don’t know about that plastic bag tax, that idea is going to get raked over the coals. It’s probably the best way to reduce the use of plastic bags (which are a menace), but man that proposal has “nanny state” written all over it. Aldi is probably fine with it, but I can’t think of any other grocery or retail stores that operate without them
- Last Bull Moose - Monday, Feb 25, 19 @ 9:49 am:
The state needs more revenue. The focus is on passing a progressive tax. Basic argument is either pass a progressive tax or see the state drift with underfunded agencies.
- Anon - Monday, Feb 25, 19 @ 9:54 am:
Good luck with the progressive income tax after April when people realize how bad they have been hurt by the changes to Salt at the federal level.
Illinois is going to be hammered by this, and most people are still blissfully unaware of how different their taxes will look this year.
Lopping another big tax increase on top of that one might just be the straw that breaks the camels back.
Even better, if we have any kind of economic slowdown we will be faced with having to raise taxes again during a recession which will only make matters worse.
His entire platform is a house of cards that falls apart without massive injections of new revenue, and when you look at the 5 year horizon it is just hard to see how a sustained revenue increase campaign doesn’t run into a brick wall.
- Honeybear - Monday, Feb 25, 19 @ 9:58 am:
This whole exercise seemed to be aimed towards the bond houses.
Not to impress but to “satisfice” as they say
Just enough, no more
Okay but
The candy has to get made.
Oompa Loompas need a
Fair contract
Placed on the correct wage step
Back pay for stolen wages
Empty positions filled. Departments/Agencies restored
Oompa Loompas make the candy
- Anonymous - Monday, Feb 25, 19 @ 10:04 am:
Unfortunately, illinois need to survive on less candy.
- lake county democrat - Monday, Feb 25, 19 @ 10:06 am:
The bag tax is an awful idea - it’s an “in your face” tax, like the soda tax, that acts as a Republican advertisement every time a voter goes to the store. Not worth the revenue when you’re looking to go big.
- Generation X - Monday, Feb 25, 19 @ 10:16 am:
It will be interesting to see what model Pritzker proposes but in my estimation Maryland has a progressive tax that may fit what Pritzker is looking for.
https://www.incometaxpro.net/tax-rates/maryland.htm
I do think the new SALT limits are going to make any proposal a more difficult sell. The people you are looking to gain revenue from just took a significant hit federally.
- Anonymous - Monday, Feb 25, 19 @ 10:16 am:
Just highlights how bad the states revenue situation is. The commenters mentioning how the Federal bill is going to nail Illinois are right - I don’t know if i can see the burbs eating another tax increase after the GOP has already nailed everyone. That was one of the points of the federal bill, of course.
Trouble, trouble, trouble. The Guv is doing his best. Thank God we finally have someone who actually cares.
- Anon1 - Monday, Feb 25, 19 @ 10:19 am:
The most interesting thing about the progressive tax experience is going to be the new class of residents in our state who were unaware they are considered rich.
To raise the kind of money that jb is talking about is going to reach deeply into the middle class to get it.
To raise that kind of money only from the millionaire class would make the rates so high it will spur folks to move elsewhere.
Many 2 worker union households are going to be in for the shock of their lifetimes when they realize just how wealthy the state thinks they are under a progressive tax.
- thoughts matter - Monday, Feb 25, 19 @ 10:22 am:
He’s going to have a tough time with the conservatives on the graduated tax. I have a conservative ( politically, otherwise fairly accepting) retired friend. She and her ilk are already screaming about the graduated tax and how it will supposedly hurt them. She’s not at all rich, and most of her income is already exempt from state taxes. People blindly believe the graduated tax is unfair to them without even investigating. How do we get past that?
- don the legend - Monday, Feb 25, 19 @ 10:24 am:
JB can offer all kinds of tax increases and amendments as long as he lowers the tax on alcohol and gets recreational marijuana.
Don’t worry, Be happy.
- Anotheretiree - Monday, Feb 25, 19 @ 10:33 am:
==Lake County Democrat awful idea== It’s not just abut the revenue. It takes 500-1,000 years for plastic to break down. It will disappear gradually, but that is “photo degrading”, sunlight breaks it down into smaller pieces. All of the plastic ever produced that hasn’t been recycled or burned, is still out there. Probably some inside you. Pollution is a “cost of production” . That cost needs to be recognized. Unfortunately you are right that the GOP will use this. At some point we need to accept the costs of their base to the rest of us.
- Anon - Monday, Feb 25, 19 @ 10:34 am:
Gen X-
The Salt cap is the most under reported story imaginable given it’s impact on our state going forward.
JB is operating as if it doesn’t exist and it, and at least until April 15th to most of this state it doesn’t yet.
The idea that there isn’t going to be any push back when the state wants to come after that same group of earners for yet another whack at them is terribly naive.
Most of the people who will see their taxes increase a good bit don’t even know it yet.
The enthusiasm level for a big increase in the state income tax after they just got done righting a big check to the federal government on April 15th will change the current popularity of the progressive income tax.
Even more so because without the ability to write off that state increases on their federal taxes anymore people will be eating and feeling every last dollar of tax increase in ways they haven’t had to in the past.
In many ways jb is a victim of poor timing, because without the changes to Salt at the federal level I think a big progressive income tax increase would be in the bag.
The environment has changed entirely though, and after April 15th everyone will be aware of it in a way they aren’t now.
It has been frustrating quite frankly that Rich and this blog has paid zero attention to just how big an effect the Salt change is likely to have on policy going forward.
All conversations about the progressive tax here reside in a world that no longer exists with the new Salt cap. It’s like we pretend it doesn’t exist, and that people’s sharply higher federal taxes won’t have any downstream affect on how this issue plays out.
Raising taxes in this new environment is a harder lift than it used to be because people just wrote the increases off on their federal returns.
Those days are over, and any tax increase becomes far more painful.
Rich is usually more forward thinking and insightful than he has been on the Salt issue. It is a huge elephant in the middle of the room, but it is not reflected at all in these parts.
Considering how badly it is going to hurt our residents that has been very surprising.
- Grandson of Man - Monday, Feb 25, 19 @ 10:44 am:
“I do think the new SALT limits are going to make any proposal a more difficult sell.”
The graduated tax plan will likely have a cut for the vast majority of Illinoisans. There should also be property tax relief included. The vast majority who would benefit are far more than those who would be taxed higher.
Republicans would be unanimously against tax cuts for the vast majority of Illinoisans to protect the richest. That ought to go over real well with voters.
Plus, Trump and national Republicans are to blame for the SALT cap.
Long-term structural reform is the goal. We can’t keep going with the status quo that leaves the most vulnerable and state workers in a worse place while those making the most money are taxed at the same rate as everyone else.
- Generation X - Monday, Feb 25, 19 @ 10:53 am:
From my recollection there has been a lot of discussion on the Salt actions here, both by Rich and others.
The perplexing part to me is the objections that some commenters have to Salt, but are all for a progressive tax.
I get that it was a Trump idea and that by design it was aimed at “Blue” states but it operates under the same premise that the “wealthy” should pay more.
Imo which means nothing there should be a low Federal Flat Tax only, allowing the State’s the freedom to tax it’s citizens at a rate that enable the State to keep it’s priorities funded. This unholy marriage of Federal dollars to the states results in Illinois paying for Alabama priorities and vice versa.
- Responsa - Monday, Feb 25, 19 @ 10:53 am:
Which came first? The chicken or the egg? The outrageous property taxes many of us in Illinois currently pay, or the federal SALT cap which primarily affects only those who pay those outrageous property taxes to begin with.
- Phenomynous - Monday, Feb 25, 19 @ 10:54 am:
I thought the Governor was prohibited from counting new revenue in his introduced budget? Or was the 4% across the board cut his fulfillment of the balanced budget requirement?
- Pundent - Monday, Feb 25, 19 @ 11:01 am:
=The bag tax is an awful idea - it’s an “in your face” tax, like the soda tax=
Weaning yourself off of plastic bags really isn’t a heavy lift.
- Steve - Monday, Feb 25, 19 @ 11:09 am:
Anon is right. The SALT cap makes it very difficult to raise state and local taxes. New York and New Jersey are already in a pickle because the revenue they expected isn’t coming in. Illinois may have missed their opportunity to have a progressive income tax.
- Responsa - Monday, Feb 25, 19 @ 11:12 am:
==Weaning yourself off of plastic bags really isn’t a heavy lift.==
This is probably true over time for most people in most cases. However, that is also obviously why the revenue being projected from a statewide bag tax in the governor’s new budget is probably way off. Public policy or revenue policy. Pick one. Because the approaches and incentives should logically be different depending on the outcome you desire. .
- RNUG - Monday, Feb 25, 19 @ 11:34 am:
== Good luck with the progressive income tax after April when people realize how bad they have been hurt by the changes to Salt at the federal level. ==
Not a scientific sample, but three couples I know all got larger federal refunds this year. One low income, one lower middle, one upper middle. And I suspect two of the three would get a cut under a progressive state income tax
- RNUG - Monday, Feb 25, 19 @ 11:39 am:
Personally, I would like to see an outright ban on plastic bags. Yeah, a nanny state idea from a libertarian. But I’m sick and tired if seeing them as liter everywhere. Go back to unbleached paper that is farmed for the purpose, switch to biodegradable soy based plastic, or just rely on reusable (admittedly sometimes oil based) fabric bags. Better for the environment and reduces oil usage.
- Blue Dog Dem - Monday, Feb 25, 19 @ 11:43 am:
RNUG. I am sort of shocked you think taxes for the middle class may go down under a progressive tax. CA,MN,NY. States claiming to have a progressive tax. All have middle income rate higher than 5%.
- Rich Miller - Monday, Feb 25, 19 @ 11:53 am:
===All have middle income rate===
Look at the effective rates. I’m not going to tell you that again.
- RNUG - Monday, Feb 25, 19 @ 11:54 am:
-blue dog-, depends on where you draw the line. From the 2016 tax data the other day, I think families under $75k will most likely see a cut and $75k- $100k may be neutral. I expect $100k up will see a raise. But in raw numbers, there are more families under $100k than over.
- wordslinger - Monday, Feb 25, 19 @ 12:07 pm:
–Which came first? The chicken or the egg? The outrageous property taxes many of us in Illinois currently pay, or the federal SALT cap which primarily affects only those who pay those outrageous property taxes to begin with.–
Neither. It was and is the continued transfer of wealth from states like Illinois to federally dependent “low tax” states.
If you’re from around here, you should have caught on to that by now.
- wordslinger - Monday, Feb 25, 19 @ 12:14 pm:
Pardon, I meant to post this link.
https://taxfoundation.org/states-rely-most-federal-aid/
- Blue Dog Dem - Monday, Feb 25, 19 @ 12:20 pm:
Household income in California of $58k married status. Effective rate higher than 6%. Minnesota about the same. Maybe my google skills are rotten though.
- Jibba - Monday, Feb 25, 19 @ 12:24 pm:
I suspect that the progressive income tax will not provide much of a cut for the lower incomes. They will need to stay the same, or have a very tiny decrease that acts as a fig leaf. We need lots of money, and commenters above are correct that we cannot raise unlimited billions from the high earners alone.
Even if JB does not want rates suggested yet, I would love to see some revenue estimates given some example rates. I think it is difficult to ask the very wealthy to pay rates that are more than a couple points higher than the middle class, but will that raise enough?
- Anonymous - Monday, Feb 25, 19 @ 12:28 pm:
A plastic bag tax that leaves a loophole for biodegradable corn starch-based and soy-based bags is a win-win-win: Cuts plastic pollution, supports ag, raises revenue.
- Responsa - Monday, Feb 25, 19 @ 12:44 pm:
“Transfer of wealth” to other states has little to do with the specific SALT cap discussion here today. Most of the taxpaying Illinois families who live in similar sized houses or property downstate instead of ones in Lake or Cook or DuPage will not be affected by the SALT cap at all. There are excellent and positive tradeoffs for those of us who choose to live in Chicago, close suburbs and collars. For some of us that means unhappily but still willingly (as long as we can afford it) paying the high property taxes to stay in our family homes and reap those benefits both pre or post SALT cap. But it is the initial tax–not the cap– which is causing the greater fiscal pain.
- Last Bull Moose - Monday, Feb 25, 19 @ 12:53 pm:
Like RNUG, I would ban plastic bags unless they are biodegradable. I think of plastic bags as asbestos. Extremely useful, but with long term costs that are too great.
- wordslinger - Monday, Feb 25, 19 @ 1:04 pm:
–“Transfer of wealth” to other states has little to do with the specific SALT cap discussion here today.–
How do you figure that? Illinois taxes itself to pay for services that other states get from the federal government. That was the rationale for the state and local tax deduction to begin with.
- Da Big Bad Wolf - Monday, Feb 25, 19 @ 1:06 pm:
There is a bill in the House and the Senate to restore the full SALT deduction. It has bipartisan support.
- Big Jer - Monday, Feb 25, 19 @ 1:13 pm:
===It was and is the continued transfer of wealth from states like Illinois to federally dependent “low tax” states===
To support what wordslinger says but in a different light here is a link also showing how little federal aid Illinois gets:
https://www.theatlantic.com/business/archive/2014/05/which-states-are-givers-and-which-are-takers/361668/
The above link seems to point to how much wealth/or lack of poverty a state has in getting federal aid but if you look at the interactive link there are pockets of Illinois that have double digit poverty.
Also Illinois is in the top five for how little federal aid it gets per federal taxes paid i.e. not much federal bang for the buck.
As Word mentions, the above article also states:
t’s not just that some states are getting way more in return for their federal tax dollars, but the disproportionate amount of federal aid that some states receive allows them to keep their own taxes artificially low.
- RNUG - Monday, Feb 25, 19 @ 1:44 pm:
== t’s not just that some states are getting way more in return for their federal tax dollars, but the disproportionate amount of federal aid that some states receive allows them to keep their own taxes artificially low. ==
Not that is will ever happen today, but we should go (back?) to a system where only the states collect most taxes and then send the needed federal share to Washington, based on population. That change would also include reverting to State Legislatures electing the US Senators to represent the State’s interests. Solves the problem of the federal government controlling states through revenue grants. Would also force a reduction in the size of Federal government, since it would be the states controlling the purse strings. As I said, it will never happen today but that would be a lot closer to the Republic the founding fathers envisioned.
- Bruce - Monday, Feb 25, 19 @ 2:22 pm:
Rich while it’s true that the RTA Paratransit grant for $4+ million is zeroed out of what was historically paid from the Road Fund there is an equal amount added to the grant paid out of the General Revenue Fund. See page 339 of the budget. So it appears the Paratransit Grant for FY2020 is status quo to last year - $8.4 million.
- Anonymous - Monday, Feb 25, 19 @ 2:46 pm:
—Not that is will ever happen today, but we should go (back?) to a system where only the states collect most taxes and then send the needed federal share to Washington, based on population. That change would also include reverting to State Legislatures electing the US Senators to represent the State’s interests. Solves the problem of the federal government controlling states through revenue grants. Would also force a reduction in the size of Federal government, since it would be the states controlling the purse strings. As I said, it will never happen today but that would be a lot closer to the Republic the founding fathers envisioned.—-
This is the answer right here. However, the Federal Government has become a Juggernaut of power which reaches into almost all areas of life without clear Constitutional authority.
Much of what Washington does, would be better handled exclusively by the States. Won’t happen though
- City Zen - Monday, Feb 25, 19 @ 3:34 pm:
==Also Illinois is in the top five for how little federal aid it gets per federal taxes paid i.e. not much federal bang for the buck.==
You just described my school district. Little state aid per state taxes paid. Not much state bang for the buck.
Shall we remedy this as well?
- Anon - Monday, Feb 25, 19 @ 4:50 pm:
Da Big Bad Wolf-
The Salt deduction cap isn’t going away at this point.
There won’t be 60 votes in the Senate to ever pass its repeal again given the cost.
Imagine the uproar of Democrats trying to pass a repeal which could cost the government a projected $700-800 billion over a decade that statistically benefits only about the top 10% of wage earners.
I myself was dumbfounded at how expensive the unlimited Salt deduction really was, and the cap as it is is good policy. It was originally supposed to go away entirely, but Susan Collins and a few others wouldn’t have voted for something without at least some reasonable cap.
The Democrats and Blue state republicans will talk about repealing it, but with a price tag north of half a trillion dollars (for something that really only benefits the rich statistically) it isn’t happening with large budget deficits already baked in.
- wordslinger - Monday, Feb 25, 19 @ 7:21 pm:
==Also Illinois is in the top five for how little federal aid it gets per federal taxes paid i.e. not much federal bang for the buck.==
You just described my school district. Little state aid per state taxes paid. Not much state bang for the buck.
Shall we remedy this as well?–
I’m shocked you haven’t moved to a school district with low property taxes. Isn’t that what you say those with money do all the time — just move, because of taxes?
Did you not know about the property taxes when you moved there?
What possible reasons could you be staying in a high property tax school district that gets little state aid?
Could it be…. the schools?
- Da Big Bad Wolf - Monday, Feb 25, 19 @ 7:25 pm:
Anon, who know? Trillions of dollars deficit was no deterrent the last time.
- wordslinger - Monday, Feb 25, 19 @ 7:47 pm:
–The Democrats and Blue state republicans will talk about repealing it, but with a price tag north of half a trillion dollars (for something that really only benefits the rich statistically) it isn’t happening with large budget deficits already baked in.–
You’re a laugh riot. Who is it that you think benefited from the tax cuts that ran up the trillion dollar deficit? I don’t think that’s all EITC.
And for the record, in 2014, 32% of Illinois filers took the SALT deduction at an average of $12,877.
I doubt if those two-income, mortgage-paying families that pay $12,877 in state and local taxes are going to agree with your definition of “rich, statistically.”
Ask Peter Roskam.
https://smartasset.com/taxes/trumps-plan-to-eliminate-the-state-and-local-tax-deduction-explained
- Anonymous - Monday, Feb 25, 19 @ 8:40 pm:
The thing about a bag tax rather than a ban is the taxes often go a longer way towards reducing use than outright bans do. Washington DC passed a tax almost a decade ago and found bag use declined by 90% in the first month. It works well to get a real nuisance out of the waste stream, but the financial benefits will be more in saving on bags jamming recycling and waste-transfer facility machinery than in actual revenues to the state.
- City Zen - Monday, Feb 25, 19 @ 10:01 pm:
==Could it be…. the schools?==
Medication not kick in yet? Or maybe it already has.
The post I responded to had the old “which states are givers and takers” article. So much concern about the states that are “takers” yet there are plenty of similar-type “takers” within our own state. One’s open season, the other is taboo.
Do I wish Illinois got more money back from the feds? Absolutely. Sounds like a wonderful project for all those Democratic representatives we have in Washington. Who knows, maybe someone from Illinois will become President some day and remedy this inequity as well.
- wordslinger - Monday, Feb 25, 19 @ 10:22 pm:
–The post I responded to had the old “which states are givers and takers” article. So much concern about the states that are “takers” yet there are plenty of similar-type “takers” within our own state. One’s open season, the other is taboo.–
Give yourself more credit. You’re always going off on how higher taxes lead people to move.
Curious, though, that you don’t find yourself in the lower property tax districts in your immediate neighborhood.
- Blue Dog Dem - Monday, Feb 25, 19 @ 10:29 pm:
I have googled til i am blue in the face(no pun).i cant find how much of illinois’ dollars go to ag support. Asking for a friend.