After lawmakers pass budget with cuts and tax hikes, Gov. JB Pritzker blames state's fiscal challenges on Trump

Yahoo

2 days ago

SPRINGFIELD — While offering a sunny take on the passage of a roughly $55 billion state spending plan balanced in part by cutting back on some of his own priorities, Gov. JB Pritzker on Sunday blamed Illinois' latest fiscal challenges not on a state tax system he once described as 'unfair' and 'inadequate' but on economic headwinds created by President Donald Trump.
'This year has been hard across the entire Midwest — indeed, the entire country,' Pritzker told reporters in his state Capitol office, nodding to cuts in areas such as public health and higher education in neighboring red states Indiana and Iowa.
'Donald Trump's incomprehensible tariff policies have put a tax on our working families and dampened the nation's economic outlook,' he said. 'The Trump slump is affecting every state, and the chaos and uncertainty of the Republicans' proposed cuts to health care and education and jobs have made budgeting, well, harder than ever before.'
The spending plan, which was passed by lawmakers on Saturday shortly before a midnight deadline and awaits Pritzker's signature before the state's fiscal year begins July 1, makes nearly $400 million in spending cuts, including $193 million in operational cuts across state agencies, beyond what Pritzker proposed in February, according to budget negotiators.
It also relies on increased taxes on tobacco products, online sportsbooks, and overseas and out-of-state corporate earnings as well as one-time revenue measures, which together total more than $800 million.
Pritzker's efforts to blame Trump for Illinois' latest budget woes and contrast the state's spending decisions with those of neighboring Republican-led states came at the end of a spring legislative session during which the governor continued efforts to raise his national profile.
His relentless criticisms of Trump — particularly in a fiery speech to New Hampshire Democrats and appearances on cable news, late-night TV and podcasts — have stood in contrast to the softer tone employed by some other prominent Democratic governors and further fueled speculation Pritzker is eyeing a White House run in 2028.
Before that, however, the billionaire Hyatt Hotels heir must officially decide whether to run next year for a third term as governor. It's widely expected he will, though he didn't answer when asked about it as he departed his Sunday morning news conference.
Pritzker's reluctance to embrace a more comprehensive approach to overhauling the tax system after his failed effort to amend the state constitution in 2020 to allow for higher rates on larger incomes suggests a wariness about giving credence to political opponents eager to brand him as a tax-raiser.
Indeed, the governor vowed to use his veto pen this year if lawmakers sent him a spending plan that relied on 'broad-based' increases to sales or income taxes.
Pritzker's hesitancy over taxes extended to the unresolved debate about how to overhaul governance and increase funding for Chicago-area mass transit systems facing a looming fiscal cliff of more than $771 million. While echoing the need for changes to the disjointed board structure of the city and suburban bus and train systems, the governor hasn't publicly endorsed a funding plan, and legislators left town without sending one to him.
As for the state's longer-term financial picture, the kind of deeper cuts Republicans espouse are anathema to Pritzker and the legislature's Democratic supermajority.
But rather than expending political capital on broader revenue-generating efforts such as a renewed push for a graduated-rate income tax or an attempt to expand the sales tax to cover more services, both common practices in other states, Pritzker's answer on Sunday for state budget stability is 'more stability out of Washington, D.C.'
'We would not have suffered this problem had we not had the Trump slump affecting us,' Pritzker said. 'There are $500 million of reduced revenues to the state of Illinois as a result of what Donald Trump has done to a booming economy.'
Throughout the closing days of the legislative session, which adjourned in the early morning hours Sunday, Democrats repeatedly pointed the finger at Trump and congressional Republicans for the difficulties the General Assembly faced in crafting the upcoming year's budget.
Presenting the spending plan on the House floor late Saturday, Majority Leader Robyn Gabel of Evanston said a big reason for many of the proposed cuts was the uncertainty over whether the Trump administration would deprive Illinois of critical federal funding for Medicaid and in other areas.
'I want to emphasize that these were not decisions made lightly or made hastily. These are strategic efficiencies so we can invest in the needs of our working families and seniors on fixed incomes,' Gabel said. 'Of course, we do not know the full extent of the cuts Washington is preparing. But we do anticipate that health care access and infrastructure will be most directly impacted.'
Democrats cut back on the $350 million annual increase in school funding required under a 2017 state law, withholding $43 million that normally would go to a grant program designed to help school districts with high property tax rates and low real estate values. They characterized the move as a pause to allow for a study of whether the program is working as intended.
The overall spending plan followed Pritzker's recommendation to pause one of his key priorities: a $75 million annual increase to boost the number of seats in state-funded preschool programs. The budget would keep the spending level with the current year.
The budget also cuts back on another Pritzker priority, suspending monthly contributions to the state's 'rainy day' fund for a year. Instead, about $45 million would be held in the general fund, which pays for day-to-day operations.
Funding for a program that provides Medicaid-style health insurance for noncitizens ages 42 to 64 also was zeroed out, a savings the governor's office estimated at $330 million, though the budget includes $110 million to continue coverage for those 65 and older.
During the House debate, Rep. Dagmara Avelar, a Democrat from Bolingbrook and member of the legislative Latino Caucus, said she was supporting the overall spending plan even though it was 'not a perfect budget.'
'In fact, it's painful. It eliminates a program that has been a lifeline for many, including people that I have fought alongside for years,' she said. 'But I'm voting 'yes' because leadership requires hard choices. And this budget protects more than it cuts.'
To that end, the budget includes an 80-cent-per-hour wage increase for direct support professionals who work with people with developmental disabilities. But it reduces the hours the state would pay for by 35%, which Gabel, the House majority leader, characterized as 'rightsizing.' Advocates and unions have said wages needed to be raised by $2 an hour to meet recommendations that those workers be paid 150% of minimum wage.
At a Senate committee hearing on the plan Saturday afternoon, Sen. Chapin Rose of Mahomet, a GOP budget negotiator, called the reduction in hours a 'cynical sleight of hand.'
Safety-net hospitals serving low-income patients and communities are set to receive $118 million in grant funding, less than the roughly $160 million some lawmakers were hoping for.
The Monetary Award Program, which provides grants to lower-income college students, will see a $10 million boost to a total of nearly $722 million.
The budget also will devote $75 million to help ensure pensions for newer state employees meet a federal requirement to be on par with Social Security benefits, and it sets aside $100 million for a 'bridge fund' to cover unexpected shortfalls in the coming year.
Despite the fiscal challenges, the Democratic plan includes $8.2 billion in new spending on infrastructure projects, which are separate from the operating budget and funded by dedicated taxes and borrowing.
Republicans accused the majority party of once again hoarding that money for projects in their own districts.
'Let's hide this stuff. Let's hide it so that the public doesn't see it until it's too late. Let's blame everybody but ourselves. The Trump administration did this. The Trump administration did that. I call BS,' GOP Rep. John Cabello of Machesney Park, who was a Trump delegate during last year's Republican National Convention in Milwaukee, said during the House debate late Saturday. Cabello also said Republicans weren't given a chance to fund projects on behalf of taxpayers in their districts.
On the revenue side, a tax amnesty program that would allow delinquent filers to pay off their tax debt without penalties is expected to generate $228 million in one-time money for the state.
The plan also includes a set of tax law changes that would give the state the ability to tax more offshore and out-of-state corporate income. Taken together, those changes would bring in an estimated $336 million in ongoing revenue.
Democratic Rep. Will Guzzardi of Chicago, a House budget negotiator and member of the progressive caucus, said the budget will be balanced, in part, with 'revenues paid for by the biggest and most profitable corporations that do business in Illinois, who can afford to pay a little bit more to help us fund the operations of our state, closing loopholes and going after financial tactics that those companies use to avoid paying what they should.'
There's also a new per-wager tax on online sportsbooks, expected to generate $36 million in the coming year.
Taxes will go up on tobacco from the current rate of 36% of wholesale price for cigarettes and 15% for vaping products to 45% across the board, including nicotine pouches, which have exploded in popularity in recent years. The $50 million in anticipated revenue would go to tobacco cessation efforts and the state's Medicaid program.
Republicans criticized the use of one-time revenue streams to fill shortfalls, including the diversion of money from road projects by again delaying a shift of revenue from the sales tax on gasoline from the state's general fund to the road fund, freeing up $171 million to spend on operations.
Pritzker defended the practice, saying Democrats crafting the budget tried to ensure 'any one-time revenues … really matched up with or … were diminishing of the one-time expenditures that we have to make.'
Even without a substantial overhaul of the state's income or sales taxes, Pritzker said, the state has 'gotten really much closer than ever before' to erasing a structural budget deficit his administration pegged at $3.2 billion shortly after he took office in 2019.
Still, some other Democrats, especially members of the party's progressive wing, believe there needs to be a deeper look at how services for residents across the state are funded, particularly given the uncertain economic times.
Guzzardi, the House budget negotiator, was a co-sponsor of legislation that put the graduated income tax question on the 2020 ballot and 'fought really hard' in the unsuccessful campaign for its passage.
'I still think it's the kind of change that our state is going to need, the systemic change to our tax structure, to ease the burden on working families and to generate the revenue we need to fund vital services by asking the folks at the top to pay,' Guzzardi said Sunday. 'We have to make a more convincing case to the voters, that much is really clear.'
More immediately, though, lawmakers are under pressure to address the dire financial situation facing Chicago-area mass transit with the impending expiration of federal coronavirus relief money.
In the closing hours of the spring session, Senate Democrats introduced and passed a plan to address mass transit governance and funding, including a new $1.50 fee on retail deliveries.
Sen. Ram Villivalam, a Chicago Democrat and point person on transit issues, called the plan 'unprecedented' and said it would create 'the world-class, safe, reliable, accessible, integrated public transit system we need for our northeastern Illinois region.'
But key House Democrats said their chamber didn't take up the Senate proposal before adjourning for the spring because they wanted to focus first on overhauling the way the various transit agencies operate before allocating taxpayer money to those changes.
'I would say that the commitment has always been to do reform first. And then talk about doing revenue,' Rep. Eva-Dina Delgado, a Chicago Democrat, said. 'We worked really hard along with the Senate on putting together that reform. Unfortunately, we had different approaches to how to get that across the finish line.'
Rep. Kam Buckner, another Chicago Democrat involved in transit negotiations, said it would've been 'irresponsible' for House members to vote on the Senate plan without being thoroughly familiar with its funding proposal.
The measure came over from the Senate after midnight Sunday, when the threshold to pass legislation taking effect before June 2026 increased from a simple majority to three-fifths. That didn't allow enough time for House Democrats to review the proposed tax and round up the votes needed to pass it, Buckner said.
Pritzker likewise said Sunday that he hadn't had much time to review the delivery tax proposal, which was met with stiff opposition from business groups and others.
'I obviously want to make sure we're lowering, not raising, taxes whenever we can,' the governor said, adding that he looks forward to reviewing future proposals in the coming months.
It's important for there to be 'significant work that'll need to be done over the summer and in the fall' on governance and funding the Chicago-area and downstate transit systems, Pritzker said.