Illinois Senate Democrats introduce mostly temporary $1.8 billion tax relief proposal

Includes direct checks to Illinoisans, expands on Pritzker proposal by $800 million

SPRINGFIELD – Democrats in the Illinois Senate have announced a $1.8 billion package of mostly temporary tax relief proposals that they hope to include in the Fiscal Year 2023 budget as the legislative session enters its final week.  

The package, rolled out on Friday, is $800 million beyond the tax relief package proposed by Gov. JB Pritzker in his budget in February, although it includes many of the same tax reductions backed by the governor. The measures are contained in eight amendments to Senate Bill 1150.

The measures include direct checks to Illinoisans, a 10-day stay on taxes on schools supplies and qualifying clothing, and a six-month stay on the grocery tax and a motor fuel tax increase, among others.

Lawmakers are scheduled to adjourn on April 8, with the budget being the main proposal that still needs to be wrapped up. It needs approval from both chambers of the General Assembly and the governor.

Pritzker’s office said it will review the plan, while Republicans called it an election-year gimmick.

Sen. Elgie Sims, D-Chicago, one of the lead budgeteers in the Senate, said the tax relief was made possible by unspecified “additional revenues” made available in the budget.

“As we were going through the budgeting process, additional revenues had been made available,” he said. “And we we’ve looked at those revenues. We looked at the governor’s budget that was proposed in February, there was a billion dollars in tax relief that was planned there. So the tax relief that was planned, we’ve built on that, based on the new revenues which are available.”

Sims said only that the revenues were “identified from all sources” based on “a rebounding economy.”

Last month the Department of Revenue testified in committee that Illinois took in $4.6 billion more than expected in the current fiscal year that ends June 30, due largely to pandemic-related changes in consumer spending, although Pritzker included that revenue spike in his February budget plan.

IDOR also warned that the ongoing war in Ukraine could have an impact on revenues for the remainder of the current fiscal year and next. And some of the current-year surplus was spent on $1.4 billion in debt reduction in a measure passed last week that also addressed debt in the Unemployment Insurance Trust Fund.

The plan announced Friday would include one-time direct checks to Illinoisans. Those earning less than $250,000 in 2021 would receive a $100 check, while joint filers earning less than $500,000 would receive $200. Checks would include an extra $50 per dependent, up to three dependents.

Lawmakers said the hope would be that the checks would be distributed by September, although they said the date was based on immediate taxpayer relief, not on the fact that an election is upcoming in November.

Taxpayers would not need to take action to receive the checks. Anyone who is eligible based on their 2021 return would be sent a check.

Other programs include a six-month suspension on the state’s 1 percent grocery tax, as well as a six-month stay on the inflationary adjustment to the motor fuel tax. That equates to keeping the motor fuel tax at its current level rather than increasing it by 2-3 cents.

Democrats are also proposing to increase the state Earned Income Tax Credit by a percentage point, raising it to 19 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.

Another proposal would allow for a tax credit up to $300 for homeowners who earn less than $250,000 individually or $500,000 jointly. The credit would be 5 percent of property tax paid, up to $300.

Another measure gets rid of the sales tax on school supplies from Aug. 5 to Aug. 14 this year. The tax moratorium would also apply to qualifying clothing and footwear items up to $125 per item.

It would also give teachers a tax credit up to $300 beginning in tax year 2023, up from $250 the current tax year, for supplies purchased for their classrooms and a $500 credit for volunteer firefighters and EMS who held those positions for at least nine months in the tax year. The sponsors said those credits would be permanent.

“We look forward to reviewing this proposal,” Pritzker’s spokesperson said in a statement. “Our conversations with members of the General Assembly in both chambers have been productive, and we will continue to focus on delivering fiscally responsible relief for working families.”

Senate Minority Leader Dan McConchie, R-Hawthorn Woods, issued a statement criticizing the proposal’s temporary nature.

“The Senate Democrats’ proposal appears to be just another election year stunt,” he said in a statement. “Under their plan, checks and relief will arrive right before the election and then will expire right after the election. This is not the real reform the people of this state want and need, and Illinoisans will see right through this disingenuous gimmick.”

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