After taking a pandemic-induced hiatus from proposing large, permanent base spending increases and instead using most revenue increases for one-time expenditures, Gov. J.B. Pritzker’s recently proposed fiscal year 2024 state budget appears to increase base operational spending by at least $2.75 billion, or 7.9%.
Annual pension payments will also rise by a relatively modest $201 million, which ups the total base spending increase to $2.95 billion.
Republicans warned that Gov. Pritzker was setting the state up for a massive tax hike if revenues plummet. But Pritzker and his people repeatedly pointed out their revenue projections actually factor in a recession later this calendar year. Their projections are, the Pritzker folks say, “conservative.”
After raising the current (2023) fiscal year’s revenue projections by $1.24 billion, to $51.36 billion, revenues are projected to fall by $1.4 billion in the coming fiscal year.
Net individual income taxes are projected to rise in fiscal year 2024 by $778 million, or about 3.3%. But corporate income taxes are projected to fall by $175 million, or about 3%. Sales tax revenue will be relatively flat, rising by just $25 million.
The governor’s budget director said one factor in the sales tax projection is the gradual shift of sales taxes on motor fuel purchases from general funds to the road fund, which was negotiated when the capital bill was passed in 2019. She didn’t say, but another aspect of the flat growth is likely the projected recession. Transfers in will fall by about $1.3 billion below the current fiscal year, which the governor’s budget office has been assuming since last year.
And, even if their revenue projections are wrong, “We’ve cut budgets before,” one Pritzker administration official said.
Even Comptroller Susana Mendoza, who spent the past couple of years warning legislators and the governor not to increase permanent spending programs, backed off, depriving Republicans and conservative pundits of a Democratic champion who they had already been using as a cudgel against Pritzker and the super-majority party.
After the governor’s budget address, for example, Senate Republican Leader John Curran issued a statement saying, “We must heed the warnings of Comptroller Mendoza and be disciplined in our fiscal approach at a time when we are likely to experience a recession.”
Instead, Mendoza deemed the large base spending hike as, “careful, strategic and necessary investments.”
Human services will receive the largest spending increase at $912 million. Education, including higher education, will receive the next largest increase at $791 million. Healthcare costs will rise by $709 million, and public safety expenditures will go up by $224 million.
To some, particularly progressives and social service providers, the governor’s proposed increase is a floor, not a ceiling. “The proposed budget’s lack of investment in the home care workers who make it possible for seniors to stay in their homes may force some to forgo needed care or be forced into nursing homes,” claimed an SEIU Healthcare leader.
“We now ask the General Assembly to build on this proposed budget and advance our legislation to increase the wage rate for Direct Support Professionals by $4 an hour to help address the workforce crisis Gov. Pritzker discussed today,” an IARF official said.
The Illinois Education Association wants vision and dental insurance coverage for retirees, and several groups are pushing a $500+ million annual state child tax credit.
The governor’s people say their proposed increases are a hard ceiling. Any new funding proposals will have to come from within the proposed budget framework and forecasts. However, revenue forecasts have been known to change in the past. Often, even.
The two Democratic legislative leaders issued statements in general support of the governor’s outline. The House Democrats’ chief budget negotiator, Rep. Jehan Gordon-Booth, said she wanted to work toward a “budget that is both fiscally and socially responsible.”
The governor’s budget director, Alexis Sturm, pointed out some other good news.
“For the four years before the governor came into office, the average interest payment was about $400 million,” Sturm told reporters. “We’re running nearly $300 million, if not more, below that average now,” she said.
And Ralph Martire at the Center for Tax and Budget Accountability said the revenue this fiscal year is high enough, “to create true balance at the end of FY 2023, with no accumulated deficit carrying forward into FY 2024.” He also claimed the deficit at the end of the coming fiscal year will be the lowest “in nominal, non-inflation-adjusted dollars that it has been in 25 years.”
Not bad.
- Anyone Remember - Tuesday, Feb 21, 23 @ 9:15 am:
“… with no accumulated deficit carrying forward into FY 2024.”
Back of the envelope cash reporting says that happened for the General Funds end of FY 2022. But there’s no CAFR with the OAG imprimatur as of yet.
- The Opinions Bureau - Tuesday, Feb 21, 23 @ 9:20 am:
“Republican state Sen. Darren Bailey says…”
Did I miss something? Does Bailey occupy some sort of permanent Senate seat?
- Pundent - Tuesday, Feb 21, 23 @ 9:31 am:
After seeing where we were at prior to Pritzker’s tenure and how far we’ve come, I think I’ll give him the benefit of the doubt. And if the best criticism the ILGOP can muster up is from a guy that just got trounced in a general election but somehow stays relevant and unchecked, then I know there isn’t a compelling alternative.
- Arsenal - Tuesday, Feb 21, 23 @ 9:31 am:
==This from the same guy who physically torched a budget and shot another one. Unimpeachable expert there. /s==
Nominating Bailey and then leaving the rest of the ticket out to dry is gonna be the gift that keeps on giving for ILGOP. For at least the next two years, he’s going to be the first Republican most reporters think of to get a reaction.
I know Brady and Demmer weren’t particularly close, but they would’ve been much better spokespeople for the party.
- Steve - Tuesday, Feb 21, 23 @ 9:35 am:
A budget that increases 7.9%…. I don’t see how much longer Illinois can not increase the state income tax rates or move to a progressive income tax.
- Donnie Elgin - Tuesday, Feb 21, 23 @ 9:36 am:
““For the four years before the governor came into office, the average interest payment was about $400 million,” Sturm told reporters. “We’re running nearly $300 million, if not more, below that average now,” she said”
That is good news, and yes Illinois’s rating has gone from junk to “stable”. Much of the cost saving can be attributed to the trend of the interest rates - state/municipal borrowing rates were much higher in 2014-2017
https://www.munibondadvisor.com/market.htm
- Lurker - Tuesday, Feb 21, 23 @ 9:52 am:
Does Bailey ever give a comment without saying Illinois is ruined, destroyed, s$&# hole, etc?
- Langhorne - Tuesday, Feb 21, 23 @ 9:52 am:
Zero Base Bailey /s
Your 15 minutes are over.
- Lincoln Lad - Tuesday, Feb 21, 23 @ 9:58 am:
Somebody needs to teach Beetle that politics is different than a comic strip. It’s not about getting people to laugh at you.
- Rich Miller - Tuesday, Feb 21, 23 @ 10:03 am:
===A budget that increases 7.9%…. I don’t see how much longer Illinois can not increase the state income tax rates===
If they raise the spending base like that every year, I’d agree with you. So far, that hasn’t happened.
- Grandson of Man - Tuesday, Feb 21, 23 @ 10:10 am:
“I warned people this would happen and talked about us having to live within our means”
This is not 2011 and we saw the Tea Party and Freedom Caucus in action. Debt and deficits exploded under Rauner and Trump. All that phony debt/spending crying has been exposed. The only people who think Republicans are the party of fiscal responsibility are obviously not enough in numbers to win elections in Illinois.
- City Zen - Tuesday, Feb 21, 23 @ 10:10 am:
==one factor in the sales tax projection is the gradual shift of sales taxes on motor fuel purchases from general funds to the road fund, which was negotiated when the capital bill was passed in 2019.==
Wasn’t this already happening under the LockBox Amendment?
- Flying Elvis'-Utah Chapter - Tuesday, Feb 21, 23 @ 10:10 am:
Center Square-Making Pravda blush since 2019.
- Rudy’s teeth - Tuesday, Feb 21, 23 @ 10:27 am:
Darren Bailey is the party guest who won’t leave. His 15 minutes were up on November 8, 2022.
Bailey bounces from event to event eager to be pictured at any gathering. Does the man own a pair of dress pants?
- RNUG - Tuesday, Feb 21, 23 @ 11:00 am:
== A budget that increases 7.9%…. I don’t see how much longer Illinois can not increase the state income tax rates or move to a progressive income tax. ==
Last year’s inflation was officially 8.7% … that’s the SS COLA for this year. Most people believe the CPI used to calculate the COLA underestimates the actual inflation. But we’ll use the 8.7% number.
The budget increase is 7.9% or about 8% when you include the pension increase … that’s 0.7% LOWER than last year’s inflation. Sometime people forget is that inflation not only applies to goods and services, it also applies to taxes … so revenue will likely be up about the same percentage.
As long as the permanent budget increases are lower that the inflation / revenue increases, the sky won’t fall.
- Lefty Lefty - Tuesday, Feb 21, 23 @ 11:28 am:
I just received my regular email update from Sen DeWitte bashing the budget as irresponsible etc. And then the email disappeared. I came to CapFax to get the facts, and now I can’t respond to him. Very strange.
I wish I could quote it. He’s not a RWNJ, and he has to put a voice to the opposition, but it was full of vague doom-and-gloom statements and misdirection.
Ultimately, the fiscal games of the “old” IL Democratic Party are over, and the destruction wrought by the IL Republican Party is too. Very much appreciated.
- Demoralized - Tuesday, Feb 21, 23 @ 11:40 am:
==He’s using COVID and federal money to advance his own agenda==
Um, he’s not using COVID money in this budget for that. If ding dong had paid the slightest bit of attention he would know what that funding went for. But ding dongs like Bailey aren’t interested in doing anything but getting themselves in the news. The only thing I see that has been dodged is him being Governor. That would have been a nightmare.
- Sir Reel - Tuesday, Feb 21, 23 @ 11:47 am:
Clearly Mr Bailey has a firm grasp of the State’s fiscal situation no matter how complex and dynamic. His thoughtful and well researched statements demonstrate this grasp. If only our elected leaders would … oh wait, I’m thinking of someone else.
- up2now - Tuesday, Feb 21, 23 @ 12:00 pm:
Pritzker fixed what Rauner broke, and Bailey wants to break it back again.
- Dotnonymous - Tuesday, Feb 21, 23 @ 12:17 pm:
If you wait a minute…Bailey will just be a bad memory…and comic footnote.
- illinifan - Tuesday, Feb 21, 23 @ 12:20 pm:
To Darren Bailey, Pritzker won based on his agenda. Since he won, he also won the right to “push his own agenda”.
- JS Mill - Tuesday, Feb 21, 23 @ 12:30 pm:
=But ding dongs like Bailey aren’t interested in doing anything but getting themselves in the news.=
An insult to the ding dongs of the world if I ever read one.
- Pundent - Tuesday, Feb 21, 23 @ 4:38 pm:
=If you wait a minute…Bailey will just be a bad memory…and comic footnote.=
Bailey is filling a void in the ILGOP. The serious people have mostly gone home or have been silence. Until proven otherwise Bailey is the ILGOP. And if not Bailey whom?