Pritzker, legislative Democrats announce budget agreement; includes $1.8 billion in tax relief that includes direct checks to most Illinoisans

SPRINGFIELD — Gov. JB Pritzker and Democratic leaders of the General Assembly announced Thursday they had reached agreement on a $45.6 billion budget package that would include $1.8 billion of mostly-temporary tax relief.

Senate President Don Harmon, of Oak Park, and House Speaker Emanuel “Chris” Welch, of Hillside, said they expect a vote on the bills Friday, the last scheduled day of the 2022 spring session.

“Over the last few weeks, and especially over the last 48 hours, we engaged in a true give and take, which led to genuine compromise,” Pritzker said during a hastily-called news conference outside his office. “And it honestly helped that we all came into this process committed to a fiscally responsible spending plan that improved our state’s finances and helped our people in an hour of genuine need.”

The overall spending plan had been negotiated between the two chambers, merging three tax relief proposals that were offered by the governor and the two chambers at various points this session.

In his budget address in February, Pritzker proposed a $1 billion tax relief package that he said was aimed at softening some of the impact of inflation, which is running at its fastest pace in 40 years.

That included a one-year suspension of the state’s 1 percent tax on groceries, a pause in the scheduled inflationary increase in the state’s motor fuel tax, and a doubling of the state’s property tax rebate for homeowners.

Over the ensuing weeks, however, Democrats in both chambers of the General Assembly upped the ante, with the House proposing $1.3 billion in relief and the Senate raising that to $1.8 billion.

Those proposals were made possible by higher-than-expected revenue collections that will leave the state with a projected surplus at the end of this year.

The final package announced Thursday includes the governor’s proposal and a mix of the House and Senate add-ons. Those include:

• Suspending the 1 percent grocery tax for one year, saving consumers $400 million. Proceeds of that tax go to local units of government, but the plan calls for replacing that revenue with state funds.
• Freezing the inflationary increase in the motor fuel tax for six months, instead of the one year that Pritzker proposed, saving consumers $70 million. That money, which is earmarked for road and bridge projects, would be replaced with other state funds.
• Doubling the property tax rebate to qualifying homeowners, up to $300 per household.
• Permanently expanding the earned income tax credit to 20 percent of the federal credit, up from 18 percent, at a cost of roughly $100 million per year.
• Direct tax rebates to taxpayers of $50 per individual and $100 per child, up to three children per family, with incomes below $200,000 for individuals and $400,000 for joint filers.
• And a suspension of the state sales tax on back-to-school purchases for a limited period in August, reducing those revenues by $50 million.

In addition to those measures, the budget package calls for setting aside $1 billion in the state’s “rainy day” fund, officially known as the Budget Stabilization Fund, and spending an additional $200 million to pay down the state’s unfunded pension liability. Those measures are in addition to the debt repayment package that Pritzker signed into law in March.

Republicans criticized the package for offering mostly temporary relief, noting that the tax rebates will likely arrive just before Election Day while the suspension of the motor fuel tax hike will go away on Jan. 1.

Senate Republicans outlined their own proposal Thursday, calling for $2.2 billion in permeant relief by eliminating the sales tax on groceries and prescription drugs; capping the retail sales tax on motor fuel; doubling the senior income tax exemption to $2,000; doubling the income tax credit on property taxes to 10 percent; and offering various other tax credits.

“Right now, we’re seeing record-high inflation. It’s certainly over what we’ve seen over the past few years,” Senate Minority Leader Dan McConchie, R-Hawthorn Woods, said during a news conference. “Families are hurting, but what we need to do is have this on an ongoing basis, not as some of the (Democratic) plan proposals are, having checks arrive just before the election and then tax reductions expire right after the election.”

Welch, however, defended the package, saying he expects some Republican support and noting that budget deals typically don’t come together this early in the year.

“We have been very intentional about getting a budget out early, allowing you all and the Republicans to participate,” he told reporters. “They (Republicans) printed it out. They’ve read it. They participated in a budget hearing (Wednesday). We invited them to a meeting today (Thursday) where they had no questions whatsoever. And in committee yesterday, they supported unanimously the revenue proposals that are being talked about here today.”