After delivering on all the major pieces of his ambitious agenda this spring, Democratic Gov. J.B. Pritzker began his victory lap Wednesday, signing into law a $40 billion, bipartisan state spending plan that takes effect next month.
The governor also signed new graduated income tax rates that would take effect only if voters next year approve a change to the Illinois Constitution to eliminate the currently mandated flat tax.
Pritzker's November electoral victory restored one-party Democratic rule in Springfield, and by signing the budget into law, the rookie governor accomplished something in less than six months that his predecessor, Republican Gov. Bruce Rauner, didn't get done until the final year of his single term.
"We achieved something that has eluded state government for decades. We passed a real balanced budget," Pritzker said at a news conference at the James R. Thompson Center in the Loop, surrounded by fellow Democrats and other supporters. "Just a few years ago, simply passing a budget was considered nearly impossible, and for years before that, the budget included gimmicks and tricks and was balanced in name only. Those days are over."
The plan for the budget year that begins July 1, which members of both parties have said is balanced, increases state spending by about $1 billion over the current year. It raises funding for elementary and high schools by nearly $379 million, according to the governor's office, exceeding by $29 million the increase required in a new state education funding formula approved last year.
The plan also adds more than $150 million for higher education, including nearly $53 million more for public universities, $14 million more for community colleges and a $50 million increase in funding for grants to low-income students. Funding for the Department of Children and Family Services will increase by $80 million, which will allow the troubled child welfare agency to hire 300 additional staff, including caseworkers.
State Sen. Heather Steans, a Chicago Democrat and one of the architects of the budget, said the new spending plan takes the state in a new direction after years of cuts to higher education, social services and other areas.
"This budget now finally reverses that and shows that Illinois is not just surviving, we're thriving in this day and age," Steans said.
The governor's office anticipates a $150 million surplus, which would be devoted to paying down some of the state's $6 billion backlog of unpaid bills.
"For two years in a row, Republicans and Democrats have proven that we can balance the state's budget with no new taxes on Illinois families," House GOP leader Jim Durkin of Western Springs said in a statement.
Despite the overtures of bipartisanship, Wednesday's bill signings also highlighted the fierce political fight ahead over Pritzker's plan to change the state's income tax structure, a battle already taking shape on TV and computer screens across the state in ads from interest groups supporting and opposing the measure.
Pritzker and his Democratic supporters have described the new budget as a bridge to a more stable future for the state's chronically shaky finances. They're pinning their hopes for future stability on an amendment to do away with the state constitution's flat-rate income tax mandate and replace it with a graduated rate structure. After winning approval in the House and Senate last month, that measure will go before voters in November 2020 for ratification.
The issue is a nonstarter for Durkin and other Republicans, who uniformly voted against the proposed constitutional amendment and the accompanying tax rates.
"The graduated tax rates signed into law today are simply the next step to giving Illinois Democrats a blank check for uncontrolled spending for years to come," Durkin said in the same statement in which he praised the approved budget. "Illinois families should remain very wary on the rates that are being 'promised' today -- as Democrats will continue to come back, year after year, and pickpocket more money from Illinois families and businesses."
Some Republican lawmakers were incensed on Friday when Democratic leaders introduced the 1,500-page budget and accompanying legislation just hours before the legislative session's scheduled adjournment.
After a day of tense negotiations, however, the budget was approved by a bipartisan vote in the House late Friday and by Senate Democrats in the early morning hours Saturday. Senate Republicans voted against the plan because it includes $1,600 pay raises for legislators, a measure Pritzker defended.
Durkin and other House GOP members voted for the plan because it was part of a package -- including a $45 billion public works construction program -- that incorporated some of their priorities, including tax credits for data centers and for manufacturers that purchase equipment.
To help pay for the increases in state spending, Pritzker signed separate legislation that includes a provision to collect sales taxes from more online sellers, a new tax on insurance companies to help pay for the state's Medicaid managed care program, and a measure decoupling the state income tax from a federal tax break for companies that return foreign profits to the U.S. There also will be a "tax amnesty" program that will allow delinquent filers to pay their overdue taxes from June 30, 2011, through July 1, 2018, without penalty.
The budget does not take into account any potential revenue from legalized recreational marijuana, another measure lawmakers approved last week that Pritzker has said he will sign. Money from new casinos in Chicago, Waukegan, the south suburbs and elsewhere, legalized sports betting, and higher taxes on cigarettes and gasoline, among other sources, will be funneled to road, bridge and building projects through the capital construction program also approved last week. Those bills await the governor's signature as well.
While the budget plan had defenders on the Republican side of the aisle, GOP Rep. David McSweeney of Barrington Hills called it "an absolute joke."
"It doesn't do anything to reform pensions or Medicaid, makes no changes in state government to make it more efficient or to reduce it," McSweeney said. "The General Assembly did not pass a revenue estimate, so to say it's balanced is obviously not an accurate statement."
He added, "Anybody who voted for that budget is effectively voting for much higher taxes in the future."
Pritzker and legislative Democrats are hoping 2020 voters give the state permission to raise income tax rates on the wealthiest 3% of taxpayers, those earning more than $250,000 a year. One of the measures the governor signed into law Wednesday establishes what those rates would be beginning Jan. 1, 2021, if the constitutional amendment is approved by 60% of those voting on the question or a majority of those voting in the election.
Single and joint filers would be taxed at 4.75% on the first $10,000 of income, 4.9% on income between $10,000 and $100,000 and 4.95% on income between $100,000 and $250,000.
For single filers, the rates would be 7.75% on income between $250,000 and $350,000, and 7.85% on income between $350,000 and $750,000. For those earning more than $750,000, their total income would be taxed at 7.99%.
Joint filers would be taxed at 7.75% on income between $250,000 and $500,000, and 7.85% on income between $500,000 and $1 million. The rate would be 7.99% on total income for those earning more than $1 million.
The corporate tax rate would increase to 7.99% from the current 7%.
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