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After Successful Debut, Pritzker Has Work On Taxes, Ethics

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Gov. J.B. Pritzker
Gov. J.B. Pritzker (D-Illinois)

SPRINGFIELD – Last June, as the Illinois General Assembly wrapped up its spring session, first-year Gov. J.B. Pritzker was asked whether he would simply kick back and wait for his re-election campaign. After all, he had accomplished virtually everything on which he had campaigned: A balanced budget, a multi-billion-dollar statewide construction program, legalization of marijuana for recreational use, a $15 minimum wage and more.

But the crown jewel of the Democrat’s inaugural year — legislative approval to pursue a constitutional change in the state’s method of collecting income tax — only set the stage for the bigger challenge of convincing voters to endorse it.

Here’s a look at what 2020 brings for Pritzker and the Legislature, which convenes in late January.

INCOME TAX

Voters will be asked on the November ballot whether they want Pritzker’s graduated income tax. It would require amending the 1970 state Constitution, which requires a flat rate — currently 4.95% — on all individuals, regardless of income.

Pritzker likely will spend a good deal of the spring campaigning for what he calls the “fair tax.” While no one who makes $250,000 or less would pay more than the current rate, the tax rate tops out at 7.99% for the wealthiest residents.

The billionaire fired the financial starting gun in December when he contributed $5 million to the Vote Yes for Fairness Committee, which is campaigning for the change.

ETHICS

Separate federal criminal charges against a sitting state representative and senator, along with a flurry of federal investigations that have ensnared another senator and raised questions about lobbying activities, particularly by power giant ComEd, prompted a commission set up in October to suggest further ethics reforms in Illinois.

Lawmakers approved streamlining information about lobbying, government contracts and campaign contributions, but delayed examining fiscal reporting required of legislators and other state policymakers. The committee, made up of appointees from the attorney general’s and secretary of state’s office, as well as those of the Legislature and governor, must make recommendations by March 31.

CHICAGO CASINO

The landmark state construction program is financed in part by a massive expansion in legalized gambling, headed by a long-sought land-based Chicago casino. But the taxes imposed on it to raise revenue for the state would make it unprofitable for an investor to operate, according to a study commissioned by the city last summer.

Mayor Lori Lightfoot ventured to Springfield in the fall for a plan to ease the tax structure, but it didn’t get traction. Resolving the issue is high on lawmakers’ wish list.

PENSIONS

This is a topic that has appeared on legislative to-do lists each year for a decade or more. Decades of shorting five statewide public pension accounts have caught up to the Legislature and governor, who, to continue working to catch up, were forced this year to contribute more than $9 billion — fully one-quarter of the state’s general spending.

As a cap to a stellar rookie year, Pritzker won approval in October to consolidate 649 local police and fire department pension accounts into two funds to pool assets and cut administrative costs for local governments. It affected municipal pensions outside Cook County, so does nothing for the $44 billion shortfall in Chicago and Cook County pension programs, let alone the $137 billion gap in state accounts.

But the committee that recommended the downstate mergers will continue its work on the problem, said Sen. Cristina Castro, the Elgin Democrat who is chairwoman of the Government Accountability-Pensions Committee. But, she said, “It’s not going to be something you see in six months.”

PROPERTY TAXES

During debate over changing income taxes, some skeptical lawmakers wanted assurances that the $3 billion-plus additional revenue Pritzker contends it will raise go toward existing expenses, particularly public education, to relieve the burden on local property taxpayers. Behind New Jersey, Illinois has the highest effective property tax rate in the nation.

Pritzker put the question into the hands of a Property Tax Relief Task Force. Chicago Democratic Rep. Mary Flowers, a co-chairwoman, said recommendations include consolidating taxing districts, solving the inequities between taxing rich and poor and more.

“People should not be losing their homes because of high property taxes and so many different school districts and other types of taxing districts,” Flowers said. School consolidation in Illinois

has been anathema since it began in the 1950s, but Flowers said there are ways to consolidate administrative duties without closing schools.

And lawmakers are likely to target many other taxing bodies, from port districts and museum districts to drainage districts and mosquito abatement districts, that grew from the manner in which a previous state constitution shackled taxing powers of municipal governments, as a way to lower costs.

BUDGET

As early as his 2018 campaign for governor, Pritzker warned that the earliest a change in income tax collection could occur would be 2021, leaving Illinois struggling with revenue to cover billions of dollars in debt and overdue bills for two years.

“And going into this year’s budget, the economic experts warned us that somewhere in the spring of 2020, a slowdown (in the economy) could be coming,” said House Majority Leader Greg Harris, a Chicago Democrat. “We’ll have to look really closely at (tax) receipts and make sure we’re monitoring that.”

But look for Pritzker to push early childhood education after announcing in December an “audacious goal: Illinois will become the best state in the nation for families raising young children.” The governor convened the Illinois Commission on Equitable Early Childhood Education and Care Funding in December to establish goals for funding accessible, sound education and care from birth to five. The administration was able to get $40 million in federal money through 2022, combined with a 30% funding match from the state, for the effort.

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This story has been revised to clarify that separate federal criminal charges were filed last fall against a state representative and a state senator, and that another senator has been named in yet another federal investigation but not been charged.

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