February 4, 2022 Update

GOVERNOR’S HIGHLIGHTS: On Wednesday, first-term Democratic Governor JB Pritzker delivered his fourth combined Budget and State of the State address. The Governor stood in the spot where Abraham Lincoln delivered his “House Divided” speech and spoke to a small gathering of front-line workers, healthcare professionals, staff, and a few legislators. Legislative leaders canceled this week’s in-person session Monday night as a strong winter storm targeted Illinois. State law dictates that the Governor deliver his budget on the first Wednesday of February, thereby a delay in the speech until legislators are back in town was not an option.  

Proposed Fiscal Year 2023 Budget:  In total, Pritzker proposed FY23 expenditures of $112.5 Billion All Funds spending, including $45.4 billion in General Revenue Funds.   Governor JB Pritzker, who is seeking election to his second term in November, struck an optimistic tone as he spoke to the fiscal accomplishments of his first term, including the early pay-off of nearly $2 billion in federal funds. Pritzker noted that action, in turn freed up money otherwise budgeted for future spending. The proposed budget was further bolstered with savings from other efficiencies including: $1.2 billion in state employee and retiree health care cost savings, $300 million from realigning the state’s real estate portfolio; $97 million from bonded debt refinancing; $35 million from the pension buy out; $260 million by reducing late-payment interest; $82 million from early payoff of federal borrowing; $75 million from prefunding College Illinois Obligations; and $300 million in reduced operating costs.  

Revenue: On the revenue side, the budget proposal projects $42.367 billion in base General Funds revenue for FY23 which is a $460 million decrease from FY22 revised base estimates. Individual income taxes are expected to increase by $889 million in FY 23. Corporate income tax revenues and sales tax revenues are projected to decrease $252 million and $127 million respectively. Federal revenue forecasts equal $4.045 billion, which is a reduction of $741 million from FY 22 (mostly attributed to the end of enhanced federal Medicaid match). Revised revenue estimates now forecast Illinois will have a $1.7 billion surplus for FY 22.   

Tax Relief:  The “Illinois Family Relief Plan” proposed by Pritzker promises nearly $1 billion in one-time tax relief for Illinois families. Four prongs comprise the approach:

  • A one-year suspension of the 1% sales tax on groceries ($360 million).  
  • A one-year freeze on the automatic scheduled increase to the motor fuel tax ($135 million). Backstory: 2019 saw the motor fuel tax doubled and indexed to inflation annually so as to fund the statewide capital plan. On July 1 of this year, the motor fuel tax was scheduled for a 6.9% boost — to 41.4 cents per gallon. But under Pritzker’s plan, the motor fuel tax will instead freeze at 39.2 cents per gallon for FY 23. The administration says the loss will be offset by funds from the federal infrastructure plan.
  • A one-time rebate (up to $300) of 5% of property taxes ($475 million). Eligibility for the measure varies; rebates are slotted for individuals making $250,000 annually or less or to couples making $500,000 or less.
  • A one-year waiver of certain license fees ($38 million). The relief targets frontline healthcare workers and liquor license fees for bars and restaurants.

Pensions:  The FY23 proposed budget offers a boost in the pension payment. Beyond the required $9.6 billion payment, the administration says it is poised to add an additional $500 million. That extra pay down, says the Governor, will save the state an estimated $1.8 billion in the long term. Another pension plus offered by Pritzker: the pension buyout plan has already saved $1.4 billion on the state’s unfunded liability (translating into a long-term savings of $3.2 billion).   

Budget Stabilization Fund: The budget seeks to infuse $800 million into the state’s Rainy Day Fund, of which $600 million is from an FY22 supplemental appropriation. 

Bill Backlog: Steady progress in reducing the state’s backlog of bills was highlighted in Wednesday’s speech as well. When Pritzker took office just four years ago, Illinois’ bill backlog stood at $9.248 billion. The bill backlog is projected to be $2.877 billion at the end of FY 22 and $2.698 billion by the end of Fiscal Year 2023. 

 Early Childhood and K – 12 Education Funding: As laid out by the Governor, early childhood and K-12 education would realize funding to the tune of $20.257 billion from All Funds, and $9.738 billion in General Funds. A jump of $350.2 million would take place in the Evidence Based Funding Formula. And while Early Childhood Education would enjoy a $54.4 million bump in funding, transportation and special education grants would receive another $96 million in new funds. 

Higher Education Funding: A $208 million increase over FY22 funding is being requested by the Governor for higher ed (for a total of $2.202 billion in General Funds). Other proposed boosts include 5% for community colleges and state universities, and a $122 million infusion to the Monetary Award Program.  In addition, College Illinois, the prepaid college tuition plan, is slated to be fully funded with a $230 million supplemental appropriation under Pritzker’s plan — a move that is projected save the state $75 million over the life of the program. 

Healthcare: The FY 23 proposed budget includes $33.1 billion All Funds (including $8.080 billion General Funds) for the Department of Healthcare and Family Services. The projected liability is $23.4 billion all funds for Medicaid, with some 3.6 million enrollees. It is expected that the federal public health emergency declaration will end on July 1, allowing the 6.2% enhanced Medicaid match to extend through September 2022. The budget proposal also is earmarking: $450 million for Healthcare Transformation Collaboratives; $500 million for nursing home rate reform and new provider assessment; $150 million to the Pathways to Success Program (for children with serious mental illness); and finally, another $140 million to support behavioral health rate payments.   

Rebuilding Healthcare Workforce: The healthcare workforce needs a solid boost, Pritzker said, a goal he wants to pursue by expanding opportunities; prioritizing the attraction/retention of skilled employees; and offering financial help. Specific proposed measures include:·        $25 million for the Pipeline for the Advancement of Healthcare Workforce Program to develop high-demand healthcare positions through the Illinois Community College Board·        $2 million for the Nursing Education Scholarship program·        $2.5 million for community health work certification·        $180 million to preserve and grow the healthcare worker through the Healthcare Workforce Initiative·        $500 million in proposed changes to the nursing home rate structure A broad array of other proposed expenditures was presented, including:

  • Over $800 million for violence prevention appropriations, more than tripling State violence prevention funding since FY19. Included: appropriations for Reimagine Public Safety and R3 grants
  •   $250 million to hire more DCFS staff; increase rates for private partners; and create new residential capacity
  • $113 million for lead service line replacement loans and $2 million for lead service line inventory and planning grants 
  •  $70 million to address those experiencing a mental health crisis through 9-8-8 call centers and crisis response services
  • 50 million increase directly from cannabis revenues to communities disrupted by violence, excessive incarceration, and economic disinvestment 
  • $38 million to Employer Training and Investment Program for workforce training
  • $35 million in new capital appropriations to Rebuild Main Streets and Downtown Commercial Corridors to promote new investment and jobs development 
  • $20 million in first-time support of the Gang Crime Witness Protection Program  
  • $20 million for non-profits for anti-hate crime security measures
  • $18.6 million for three new State Police cadet classes
  • $14 million for the $0.70/hour increase for the Community Care Program
  • $8.5 million for rebates for new electric vehicle purchases
  • $5 million to develop minority entrepreneurship programs and support small, minority owned businesses
  • $4.5 million in additional funding for 550 officer-worn body cameras, car cameras, and cloud storage management

Federal COVID Funds: This year’s budget is seeking to reappropriate unspent FY22 federal monies for COVID, keying in on $235 million for Reimagine Public Safety Act grants and $300 million for state agency operational costs. 

Capital Plan: The proposed FY23 budget includes $46.5 billion in total capital appropriations. Among the recipients will be the Illinois EPA for its Drinking Water and Wastewater program ($1.2 billion) as well as its lead service line replacement loan and grant funds ($565 million). The proposed capital budget also includes $195 million in capital repatriations from the Rebuild Illinois fund initiatives, including for Transportation Electrification, the Illinois Green Infrastructure Grant Opportunities Program, and the Unsewered Communities Construction Grant Program.  Click here to review the Capital Budget.
As with other gubernatorial legislative priorities, the budget must secure the approval of the General Assembly, where Democrats hold a supermajority in both chambers. The FY23 budget review process will get underway with the Budget committees in the House and Senate, which will be reviewing it at the agency level. Legislative committees will also review revenue projections from both the Governor’s Office of Management and Budget and the Legislature’s Commission on Government Forecasting and Accountability. The budget process will be on the fast track this year, due to the legislature’s early adjournment deadline of April 8. Click here to review the Budget in Brief and the complete FY23 Budget Book.   

Energy Efficiency at Public Wastewater Treatment Plants:  The Illinois EPA’s Office of Energy is offering up to $750,000 in grant funding to upgrade energy efficiency at public wastewater treatment plants. Grants ranging from $20,000 to $500,000 will be awarded Under the Wastewater Treatment Plant Energy Efficiency Program. The goal: to assist selected municipalities in cutting energy usage at public wastewater treatment plants. This is the third such round of funding, and follows awards made in May 2020. Find materials at IEPA’s Office of Energy webpage. The application deadline is midnight on March 29, 2022. 

ELECTION UPDATE: Jonathan Jackson, son of civil rights activist Rev. Jesse Jackson, is running in the crowded Democratic Primary in the 1st Congressional District to replace Congressman Bobby Rush who is retiring.  After weighing his options, Assistant House Minority Leader Keith Wheeler announced he will seek reelection in the now Democratic-leaning 83rd House District where he currently resides. Wheeler was contemplating a run for State Senate if Senator Sue Rezin decided to run with Republican gubernatorial candidate Jesse Sullivan. Rezin announced she is seeking reelection. Wheeler also contemplated running in the nearby district against fellow Republican Representative David Welter who has a more Republican-leaning district.  Republican Tazwell County Treasurer Mary Burress will run in the open seat created when Representative Keith Sommer announced his retirement. Burress ran unsuccessfully against Senator Dave Koehler in 2020.   Republican Arin Thrower will challenge Democrat Representative Suzanne Ness in the 66th District.   Republican business owner Ashley Hunsaker is running against Assistant Majority Leader Jay Hoffman in the 113th District.  Travis Weaver, son of former Senator Chuck Weaver, is challenging Representative Mark Luft in the Republican primary in the 93rd District. Republican Peter Pettorini will run in the open 62nd District created when Representative Sam Yingling decided to run for the State Senate. Laura Dias and Tom Maillard are competing for the Democratic nomination. Republic Rory Welch announced he will challenge Representative Jonathan Carroll in the November election. Normal Town Council member Scott Preston said he plans to run as a Republican for the Illinois House in the 91st House District. Preston lives outside the 91st District but plans to relocate if he wins.  

102nd ILLINOIS GENERAL ASSEMBLY: The Illinois General Assembly canceled session this week due to a massive winter storm blanketing much of Illinois. Legislators have not met in-person since the first week of January. Committees continued to meet remotely this week. Legislators are primarily focused on considering legislation at the committee level. Senate President Harmon reiterated this week that he does not plan to extend the upcoming committee deadline.  Speaker Welch appointed a team of House Democrats to negotiate crime bills this session. The team includes Representatives Manley, Slaughter, Gong Gershowitz, Buckner, Hernandez and Vella. 
The Illinois Senate returns to in-person session on Tuesday, February 8th. The Illinois House is not scheduled to be in session next week. February 10th is the deadline to pass substantive senate bills out of Senate committees. February 18th is the deadline to pass substantive house bills out of House committees.