CHICAGO — The election-year budget plan Democratic Gov. JB Pritzker unveils Wednesday will offer tax relief to homeowners, motorists and just about every Illinoisan who ventures inside a grocery store, a top aide is confirming.
Under the plan the governor is proposing, a 1% sales tax on food would be suspended for a year starting in July, and a planned increase in the state sales tax on gasoline due to kick in then would be blocked from taking effect.
If Illinois lawmakers approve his proposal, property tax rebates of as much as $300 would come from Springfield later this year, the first time checks of that ilk have poured out of the state treasury on such a mass scale in more than two decades.
The spending outline for the state fiscal year that begins in July is being proffered by the governor’s office as a byproduct of better-than-forecast state revenues and a reaction to skyrocketing price increases on the basic staples of life.
“On a national level, of course, we are experiencing a surge of inflation…that bites into purchasing power and that is hitting working families in Illinois,” said Andy Manar, Pritzker’s deputy governor for budget and economy. “And the governor recognizes that.”
But the plan to put money in the pockets of Illinoisians comes in an election year, when voters will decide in November whether Pritzker deserves a second term. The giveaway would undoubtedly advance the governor’s campaign narrative that the state’s long-running fiscal problems are a thing of the past, thanks to his stewardship.
Implementing his proposal will fall in the hands of Democratic supermajorities in the House and Senate, which like Pritzker are looking for strategies to mitigate the possibility of big Republican gains in a midterm election cycle where President Joe Biden’s unpopularity could weigh like an anvil.
The suspension of the 1% food tax, which would cost $360 million, would mean a $2 savings on a $200 weekly shopping bill. But consumers in Chicago still would pay a 1.25% sales tax on food that helps fund the Regional Transportation Authority, a levy that wouldn’t be touched in Pritzker’s spending plan.
The percentage point tax the governor has in his sights is collected by the state and traditionally goes to municipalities across Illinois. Manar said cities and counties wouldn’t lose that money and would somehow be made whole, though he didn’t detail how.
Pritzker’s proposal on the gas tax, which would cost $135 million, would keep the existing 39.2-cent per gallon motor fuel tax in place beyond next July. Under a 2019 state law, which dictated that the state’s gas tax would grow every July based on the consumer price index, a 2.3% increase had been expected to be tacked onto the current tax.
And the property tax rebate component would apply to individuals making $250,000 annually or less or to couples making $500,000 or less. That provision would be the priciest of Pritzker’s proposed tax cuts, coming in at $475 million.
Rebates would be capped at $300. The governor’s office did not make clear whether payments would go out in the form of paper checks or direct deposits or whether they would be received ahead of the Nov. 8 general election date.
“In total, this is nearly $1 billion in relief to Illinois families,” Manar said. “And the governor believes at this moment – because we have the ability to do this with our budget stabilized and our state finances are in good shape – that we should focus on the cost of groceries, the cost of gasoline and the cost of property taxes and bring relief to families across the state.”
The state’s financial picture has been on an upswing under Pritzker with state income and sales taxes surging ahead of projections. In November, in a presentation to bond investors, Pritzker’s administration disclosed year-to-date state revenues were $1.3 billion ahead of previous-year levels.
As a result of the changing tide, Moody’s Investor Services last June became the first ratings agency to upgrade the state’s bond rating in two decades, pulling Illinois back from the cusp of junk-bond status.
Against the backdrop of Illinois’ continuing COVID-19 pandemic, Pritzker will lay out his spending priorities Wednesday in a single speech that will combine the usual State of the State address with the traditional budget address.
The speech, which WILL will carry live at 580-AM and on illinoisnewsroom.org, will occur in the Illinois House chambers, but it will be missing some of the usual pre-pandemic pomp and circumstance.
An advisory issued Friday by House Speaker Emanuel “Chris” Welch’s office said the chamber’s gallery will be closed to the public, state senators won’t be allowed on the House floor to watch the governor’s speech (but can watch from the gallery), and House members will have the option of viewing remotely. Additionally, Pritzker won’t be escorted ceremoniously in and out of the House by a coterie of lawmakers.
Dave McKinney covers Illinois politics and government for WBEZ. Follow him on Twitter @davemckinney.