The Illinois House passed a $53.1 billion state budget early Wednesday morning, approving a plan that is $400 million more than Gov. J.B. Pritzker proposed in February and raises taxes and makes other tax code changes to generate $1.2 billion to fund it.
Just after 2 a.m. Wednesday, as discussions lasted well into the overnight hours, lawmakers voted to pass the budget with a 65-45 vote.
The budget, which was passed by the Senate over the long Memorial Day holiday weekend, now heads to Pritzker's desk, where it awaits his signature.
“This budget is balanced, responsible and fair,” House Speaker Pro Tempore Jehan Gordon-Booth, a Peoria Democrat, told the Executive Committee. “It invests in children, it invests in infrastructure, it also invests in our most vulnerable.”
Republicans complained that Democrats, who control the Legislature, are spending beyond their means and not preparing for what many predict are lean years ahead. Deputy House Republican Leader Norine Hammond of Macomb said she found at least $1 billion in spending that would be pushed off to the following fiscal year.
“I have a concerns that there are gimmicks in this budget that put us on a path to a giant collision in the future," Rep. C.D. Davidsmeyer, a Jacksonville Republican, told Gordon-Booth. “I hope I don't have to say, ‘I told you so’ when it happens."
So what will it mean for residents?
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Here's are some things to know:
Grocery tax
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One thing on the minds of many Illinois residents is the state grocery tax.
The approved plan removes the tax from Illinois.
But because the tax directly benefits local communities, the budget plan would allow any municipality to create its own grocery tax up to 1% without state oversight. And those with home-rule authority — generally, any city or county with a population exceeding $25,000, would be authorized to implement a sales tax up to 1% without submitting the question to voters for approval.
Pritzker called for the tax's removal during his budget address in Springfield earlier this year, with the governor saying the proposed elimination would be a boost for families still hit hard by increasing prices. Pritzker blasted the 1% tax as a “regressive tax” that the state doesn’t need.
“If it reduces inflation for families from 4% to 3%, even if it only puts a few hundred bucks back in families’ pockets, it’s the right thing to do,” he said.
More than a dozen states currently tax groceries, and while Pritzker's desire to rid Illinois of the tax has plenty of consumer approval, the state’s current tax adds up to significant revenue for local municipalities.
Senate lawmakers touted the tax's removal over the long Memorial Day weekend, however.
“This measure is providing relief to skyrocketing grocery prices,” State Senator Steve Stadelman said in a statement. “By eliminating the state-imposed sales tax on groceries, we can provide financial relief to families across the state, making essential items more affordable.”
The 1% tax on groceries applies specifically to items that are meant to “be consumed off the premises where they are sold,” according to state law.
The sales tax was suspended as part of Pritzker’s Fiscal Year 2022 budget, with officials projecting that it could save shoppers up to $400 million.
Tax hikes
While things like the grocery tax might be eliminated, another provision in the budget could result in a higher tax bill for most of the state’s residents.
According to the text of the budget, Pritzker is proposing that the state increase its exemption allowance to $2,550 for Tax Year 2024.
Since that increase is less than what was originally called for due to inflation, the action would result in deposits of an estimated $93 million into the state’s general fund, according to the budget.
The “exemption allowance” is a standard deduction for Illinois taxpayers that is designed to reduce adjusted gross income, according to state officials.
The deduction for tax year 2023 clocked in at $2,425, according to the state’s Department of Revenue. That number was lower than the $2,625 that it was originally supposed to be, with the number determined by fluctuations in the Consumer Price Index, which measures inflation.
State officials had paused that automatic inflation-tied increase, but were going to allow it to resume in 2024, which would have increased the exemption to $2,775.
Instead, Pritzker’s plan would mean that the exemption would be $225 smaller than originally intended, which could result in a small increase in tax bills for state residents because of increases to their taxable income.
State Republicans have blasted the move, arguing that it unfairly targets low and middle-income residents.
“This is going to hit low-income and middle-income families, and it is a tax increase,” Senate Minority Leader John Curran told WBEZ. “If the legislature does not go along with this, people will get a greater tax savings with the current existing law than what the governor has proposed.”
Child tax credit and sports betting
Also included in the Senate-passed budget is increased funding for the child tax credit, which will be paid for in part via an increase in taxes on sportsbook gambling.
According to lawmakers, the budget includes "investments for $50 million for a child tax credit for eligible low-income families with earned income tax credit (EITC) as well as wage increases for direct support professionals (DSP) and Community Care Program workers (CCP) and increased funds for safety net hospitals."
The funds for this come from increased sports wagering taxes and on video gambling. Pritzker wanted the tax, paid by casino sportsbooks, to jump from 15% to 35%, but it was set on a sliding scale from 20% to 40%.
“Millions of working families across the state are struggling to make ends meet and this budget shifts tax dollars to stabilize our economy through better paying jobs and increasing the child tax credit,” State Senator Rachel Ventura said in a statement. “Not only are there major investments for early education, but also higher education. Investing in resources that afford everyone with the opportunity to receive a quality education, regardless of their ZIP Code, is vital to ensure our youth is prepared for what comes after school.”
The change would mean Illinois families with children under the age of 12 could be offered an average of $300 to $600 in credits.
“With passage of this budget, thousands of households – parents, caretakers, and children in Illinois – will get extra money every year to put food on the table, pay rent, get childcare and other basic needs that no family should have to forgo in our state," State Sen. Mike Simmons said in a statement.
Pay raises for lawmakers
According to Politico, the budget passed by the Senate also includes "cost-of-living pay raises of about 5 percent for state lawmakers."
Last year, lawmakers gave themselves a pay raise of nearly 16%.
It was the first increase since 2008. Since then, lawmakers have approved automatic cost of living adjustments, providing raises in 2021 and 2022.
Education
Among the changes in the budget was a funding change that would allow many college and university students who are at or below median income levels to have tuition and fees covered by MAP and federal Pell Grants.
There's also a $350 million increase for elementary and secondary education, as prescribed by a 2017 school-funding overhaul, but a reduction from what was requested by the state education board in federally mandated school operations. The budget puts an additional $75 million for early childhood education, meaning 5,000 more seats, Gordon-Booth said.
Medical debt
The budget passed by the Senate also includes House Bill 5290, which would create a so-called Medical Debt Relief Program.
The program would wipe out medical debt for an estimated 340,000 Illinois residents.
“When I became governor, I promised to put Springfield back on the side of working families,” the governor said on social media last month. “With my budget, Illinois will buy back up to $1 billion worth of medical debt for more than 300,000 Illinoisans. It’s the right thing to do.”
Migrant funding
The proposal to provide $182 million to fund services for tens of thousands of migrants seeking asylum in the U.S., largely bused from Texas, where they cross the border. And it provides $440 million for health care for noncitizens.
Other notable items
One of the most notable items left off the budget is money for professional sports stadiums.
Pritzker has made it clear the state wasn’t sold on the idea of public funding for new stadium plans for the Chicago Bears or the Chicago White Sox. His press secretary called the plan a “non-starter for the state.”
Political experts had speculated lawmakers would likely punt on such funding.
According to Senate President Don Harmon, the budget also includes:
- A $350 million increase in funding for public schools throughout the state
- Continued payments in long-term debt, including the retirement systems covering state workers, university employees and public school teachers.
- $2 million committed to providing increased security at reproductive health clinics.
- Addition of 280 frontline DCFS workers
“This is a responsible, responsive and balanced budget for the great state of Illinois,” Harmon said in a statement. “It offers meaningful investments in our priorities and shared goals. I want to thank my colleagues in the Senate, House Speaker Welch and Governor Pritzker for all their work in putting this plan together.”
