SPRINGFIELD – Democrats in the Illinois House unveiled their own tax cut proposals and outlined spending tied to recent public safety measures at a news conference Wednesday, just three days before the scheduled April 8 adjournment of the 2022 regular session.
Those provisions are part of a $45.6 billion spending plan for the upcoming fiscal year that begins July 1. Revenues are expected to be just over $46 billion.
A measure carried by Riverside Democratic Rep. Mike Zalewski, House Bill 1497, contained about $1.3 billion in tax relief, up from $1 billion proposed by the governor but down from $1.8 billion offered by Senate Democrats.
None of the proposals, which were filed late Tuesday, are final until both houses approve them and Gov. JB Pritzker signs them into law. The negotiations on an agreed proposal continued Wednesday.
The budget for Fiscal Year 2023 was contained in House Bill 969, but House Majority Leader Greg Harris, D-Chicago, said in the House Executive Committee that it could still pass under a different bill number as negotiations progress.
Harris said the state continues to see strong tax revenue performance, particularly in corporate income tax and sales tax receipts. Unemployment rates are dropping as well.
“There is recovery, but it is uneven,” he said. “And while some are thriving, others are still struggling. The budget we’re presenting here today is about trying to meet the needs of both those groups, helping to solidify our economic strengths at the same time giving extra supports and resources to those that still struggle.”
While the House Democrats’ plan includes direct payments to Illinoisans, it would apply to only those currently eligible for the federal Earned Income Tax Credit. Those qualifying for that credit would receive $100 from the state for single filers and $200 for joint filers, plus $50 per dependent.
It’s a major cutback from a plan proposed by Senate Democrats which would have sent checks to about 97 percent of taxpayers, making up most of the $500 million difference between the House and Senate tax relief plans.
The cost for that would be $165 million, according to estimates from the House Democrats, while another expansion to the Earned Income Tax Credit, or EITC, would cost $103.5 million.
That measure would increase the state Earned Income Tax Credit by two percentage points, raising it to 20 percent of the federal tax credit. The EITC is a credit available to low- and moderate-income households. It is a refundable credit, meaning those who qualify can receive a refund, even if the amount of the credit exceeds what they would otherwise owe in taxes.
It would also expand the state EITC to include people aged 18-24 and those 65 years and older.
Pritzker, at an unrelated news conference in his office, said his administration was analyzing the proposal, but he praised the EITC language.
“My early observation is that House Democrats took a comprehensive approach and adhered to my goals of achieving a fiscally responsible balanced budget and delivering tax relief to families that need it most,” he said.
The proposal also differs from the Senate’s plan by doubling the tax credit that teachers can claim for the personal purchase of supplies for their classrooms to $500 from $250. The Senate plan would have upped it by only $50.
The House plan also adds $100 million to the Local Government Distributive Fund, partially satisfying a longtime request from municipalities.
It’s a proposal Pritzker specifically mentioned when addressing the House’s budget proposal at his Wednesday news conference.
“I want to be sure that what’s been provided to local governments continues to be affordable within a balanced budget framework,” he said. “I look forward to working with legislators to provide relief to working families while continuing to strengthen our state’s fiscal foundation.”
Another $1 billion in tax relief is attributable to a property tax relief proposal, a one-year stay on the state’s grocery tax and a six-month stay on an automated increase to the motor fuel tax at the pace of inflation.
Property taxpayers earning less than $250,000 individually or $500,000 jointly would receive a property tax credit of 5 percent of property taxes paid, up to $300 per household.
The motor fuel tax was scheduled to rise between 2 and 3 cents on July 1 without action, but the measure would push that back to Jan. 1, 2023, while a subsequent increase at the rate of inflation would occur again on July 1, 2023.
Republicans criticized a measure that would require gas stations to post signs noting the state’s action to suspend the motor fuel tax increase for six months, and Zalewski said an amendment changing that language could be forthcoming.
Motor fuel tax is the main revenue source for the state’s ongoing road and bridge improvement plan. Zalewski said revenues lost due to the gas tax holiday would be replaced by funds from the Leaking Underground Storage Tank fund which had a balance of about $142 million as of Wednesday, according to the comptroller’s database.
Zalewski said that fund is fee- and fine-based and is normally used to remediate leaking underground storage tanks.
The budget also included $236 million in new funding that the House Democrats said would address public safety through a variety of investments in law enforcement and youth intervention programs.
That included $124 million “to support local police and reduce violent crime,” according to House Democrats. That includes funding for body cameras, license plate readers, non-deadly equipment, and ballistics testing and forensics.
Another $48 million would go toward youth employment and community investment programs, as well as a grant program for collaborative local safety councils aimed at addressing carjackings.
The budget would include $50 million for domestic violence prevention programs and $2 million for trauma recovery centers. Another $12 million would fund a witness protection program, grants for anonymous tip lines where they don’t currently exist and a $100 cash reward program for individuals who share private security camera footage with police resulting in arrests.
Some of those programs would have to be approved by lawmakers separately as well.
The budget also includes $50 million in interest payments on Unemployment Insurance Trust Fund debt, which still has an outstanding balance of about $1.8 billion after lawmakers directed $2.7 billion in federal funding to the debt last month. Harris said a solution for paying down that remaining debt is still being negotiated between business and labor interests.
It also includes the statutory added $350 million for K-12 education and a 5 percent increase for higher education.
While the budget passed out of committee on partisan lines, the tax relief in Zalewski’s bill received unanimous support, even though Republicans complained about much of it being temporary.
The bills could be heard by the full House as early as Wednesday.