GOVERNOR’S HIGHLIGHTS:
Budget Highlights: Governor J.B. Pritzker delivered his third combined State of the State and Budget Address to the Illinois General Assembly on Wednesday. Rather than deliver the budget address in person to all 177 members in a joint session as is customary, this year’s budget address was pre-recorded and delivered virtually in light of the COVID-19 pandemic. The Governor noted he had “bolder plans” for the state budget, but in light of the financial implications of the pandemic and the failure of the passage of the proposed graduated income tax, he is instead proposing a budget that he believes “finds the right equilibrium between tightening our belts and preventing more hardships.” In addition to laying out his budget plans, Pritzker also used his speech as an opportunity to criticize “far right” Republicans at all levels of government, describing them as “carnival barkers,” for lobbying against federal relief to states and ignoring health guidelines.
The Governor outlined a proposed FY 2022 budget that allocates $41.6 billion in General Revenue Funds spending ($95.5 billion All Funds), which represents a $1.8 billion reduction over the previous fiscal year. The FY 22 budget does not rely on future federal assistance and does not increase the state’s income tax. Notably, the budget also does not include decoupling Illinois tax law from new federal business tax changes which was a priority of the Governor’s during the lame-duck session last month. In order to “live within our means,” operational spending remains flat over FY21. The budget includes a hiring freeze, $400 million in additional cuts, and reserves a $120 million surplus.
The Governor proposes closing $932 million in what he characterized as “unaffordable corporate loopholes.” Republican legislators and the business community immediately called the plan a “massive tax hike on business” and characterized the move as a “betrayal” of the budget compromise brokered during the Governor’s first year in office. The tax changes targeting businesses — and their expected capture of funding– include:
- Capping the corporate net operating loss deductions at $100,000/ year ($314 million);
- Aligning treatment of foreign source dividends to treatment of domestic sources dividends ($107 million);
- Rolling back federal TCJA 100 percent accelerated depreciation ($214 million);
- Accelerating the expiration of the exemptions for biodiesel ($107 million);
- Reversing the repeal of the corporate franchise tax ($30 million);
- Capping the retailer’s discount at $1,000/month ($73 million);
- Reducing the tax credit for private school scholarships to 40% ($14 million);
- Eliminating new add-on income tax credit for construction job payroll expenditures ($16 million); and
- Removing the production-related tangible personal property from the MME sales tax exemption ($56 million).
The Governor further calls for redirecting $565 million in dedicated funds to the General Revenue Fund and extending the deadline to repay funds previously borrowed from Other State Funds. The Governor is proposing redirecting cigarette tax revenues to GRF, prorating LGDF by 10%, and transferring funds dedicated for school maintenance grants and OSLAD grants to GRF.
The FY 22 budget also proposes prorating the state sales tax revenue sharing through the Downstate Public Transportation Fund and the Public Transportation Fund; implementing a one-year delay in the shift of motor fuels sales to the Road Fund from GRF; and using the Road Fund to pay a larger portion of revenue sales tax sharing with local governments. The FY 21 shortfall, according to the Governor, was closed through federal borrowing, $700 million in operational cuts, and revenues performing better than projected. The state is now projecting a $77 million surplus for the current fiscal year, along with the ability to prepay some of the Municipal Liquidity Facility borrowing from the previous fiscal year.Also included in the FY 22 budget is $45.5 billion in total capital appropriations with $4.3 billion in new capital appropriations.
Additional detailed information on the FY 2022 proposed budget ishere. The text of the Governor’s speech ishere. Other legislative priorities for the Governor include enacting ethics reform and authorizing the second cannabis licensing lottery — both of which were considered during the January lame-duck session but time ran out before their passage. He also advocated for passing energy legislation that protects nuclear energy, builds wind and solar capacity, protects the environment, and supports jobs.
The Appropriation Committees in both chambers will now begin the process of reviewing agency appropriations. The new fiscal year begins July 1st.
COVID-19 Update: New cases of COVID-19 and hospitalizations continue to trend downward in Illinois, but the battle against the virus is far from over. This week, Illinois topped a pandemic total of 20,000 deaths from the virus. And health officials warn another surge is likely due to new, more contagious variants of the virus.
On Thursday, the Illinois Department of Public Health reported 1,966 new cases of coronavirus COVID-19 in Illinois, including 72 additional deaths. Thursday morning, labs reported 67,542 tests results. As of Wednesday night, 1,655 individuals in Illinois were reported to be in the hospital with COVID-19. Of those, 386 patients were in the ICU and 184 patients with COVID-19 were on ventilators. The 7-day statewide case positivity rate is 2.7%. The 7-day test positivity rate is 3.3%.
Vaccination Update: A combination of below zero temperatures and a massive winter storm closed many testing and vaccination sites throughout Illinois, including in Chicago. Those closures will impact both Illinois’ new case count and vaccine administration statistics for the coming days.
The federal government has notified all states of delays in COVID-19 vaccine deliveries due to adverse weather and road conditions. To help offset these delays, Illinois proactively ordered vaccines to be delivered to its Strategic National Stockpile Receipt, Store, and Stage site in anticipation of adverse weather. Illinois is distributing that vaccine to many providers around the state today and tomorrow, as weather permits, to continue to support vaccination operations.
A total of 2,106,800 doses of vaccines have been delivered to providers in Illinois, including Chicago. In addition, approximately 445,200 doses total have been allocated to the federal government’s Pharmacy Partnership Program for long-term care facilities. A total of 1,977,033 vaccines have been administered in Illinois as of Thursday morning, including 266,037 for long-term care facilities. The 7-day rolling average of vaccines administered daily is 61,132 doses. On Wednesday, 73,091 doses were administered.
November 2022 Governor’s Race: Former downstate Republican Senator Paul Schmipf announced he will seek the Republican nomination for Governor in 2022. Schimpf, who is a former military prosecutor, served one term in the Illinois Senate. He also ran unsuccessfully for Attorney General in 2014.
ATTORNEY GENERAL HIGHLIGHTS:Illinois Attorney General Kwame Raoul joined a coalition of state Attorneys General to file an amicus brief defending a policy that limits cooperation between local law enforcement and federal immigration authorities. More information is here.
102ND ILLINOIS GENERAL ASSEMBLY: Former House Speaker Michael Madigan announced that he is resigning from the Illinois House effective February 28th. However, today he announced he was stepping down immediately. Madigan, who holds the designation of being the longest serving House Speaker in the country, lost his bid in January for another term as Speaker. In his statement, Madigan said “I leave office at peace with my decision and proud of the many contributions I’ve made to the state of Illinois, and I do so knowing I’ve made a difference.” Members have been appointed to House committees. The Democratic membership list ishere. The Republican membership list ishere . Committees are expected to begin virtual meetings in the near future.
The Senate Assignments Committee met and positioned more legislation for consideration at the committee level. Virtual Committee hearings are expected to increase in the coming weeks.
COMING UP:
Today is the deadline to file substantive bills in the House. Friday, February 26th is the deadline to file substantive legislation in the Senate.