Illinois lawmakers pass budget with tax hikes on tobacco, gambling — but adjourn without transit, Bears stadium

Chicago Tribune

2 days ago

SPRINGFIELD — Democratic state lawmakers voted late Saturday, just minutes before their midnight deadline, to send Gov. JB Pritzker the final piece of a $55 billion budget balanced with a combination of spending cuts and an estimated $800 million plus in tax increases, including hikes on tobacco products, vaping and online sportsbooks.
The governor's office touted the spending plan as Pritzker's 'seventh consecutive balanced budget that continues to get the state's finances back on track.'
The General Assembly adjourned its spring session without passing legislation to address the $771 million fiscal shortfall faced by Chicago-area mass transit, and also took no action on proposals to help the Bears relocate to a new stadium in the northwest suburbs.
The session's final hours were marked by a rush to pass the budget and revenue package before June 1, when the required vote threshold rose to a three-fifths majority. Ultimately, House Democrats approved the three main components of the plan by that margin or greater.
The $55.2 billion spending portion of the budget passed the House by a 75-41 margin, with two Democrats — Reps. Larry Walsh of Elwood and Stephanie Kifowit of Aurora — joining Republicans in opposition.
A short time later, the Senate approved the measure on a 34-23 vote, two votes shy of what would have been needed after midnight. Four downstate and suburban Senate Democrats voted against the spending plan: Sens. Christopher Belt of Swansea, Suzy Glowiak Hilton of Western Springs, Mike Halpin of Rock Island and Doris Turner of Springfield.
During the House debate, Rep. Dagmara Avelar, a Democrat from Bolingbrook and member of the legislative Latino Caucus, said she was supporting the plan even though it was 'not a perfect budget,' noting her opposition to the elimination of funding for a Medicaid-style program for noncitizens aged 42 through 64.
'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.'
Majority Leader Robyn Gabel of Evanston, the chief budget negotiator in the House, said the budget made $400 million in spending cuts, including $193 million in operational cuts across state agencies. A big reason for those reductions, she said, was the uncertainty over whether Republican President Donald Trump's 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.'
Pritzker also took shot at Trump in his post-budget statement.
'Even in the face of Trump and Congressional Republicans stalling the national economy, our state budget delivers for working families without raising their taxes while protecting the progress we are making for our long-term fiscal health,' Pritzker said in a statement.
Illinois House passes bill allowing terminally ill people to end their lives with physician's helpRepublicans criticized what they called a bloated budget and said the Democrats' attempts to lay blame on Trump Republicans in Washington are misguided.
'The tax-and-spend Democrats … are so unfamiliar with cost-cutting, they call it chaos,' said GOP Rep. William Hauter of Morton. 'They wasted billions. And they are prepared to waste billions more. Wake up, Illinois. Vote 'no.''
Pointing to the $40 billion budget approved after Pritzker first took office in 2019 and last year's roughly $53 billion plan, Sen. Chapin Rose of Mahomet, a GOP budget negotiator, said Democrats must shoulder the blame for the state's fiscal issues.
'Let's be clear: $15 billion over six years, that's on you,' Rose said. '$2 billion increase over last year, that's on you. Billions of dollars in tax increases that are driving working families out of Illinois, that's on you.'
Senate Republican leader John Curran of Downers Grove faulted Democrats for once again pushing their budget package through in the final hours of the legislature's spring session without sufficient time for review, particularly on the tax side of the ledger.
Democrats 'introduced a bill, $880 million in tax increases, we were told — nearly $1 billion — and six short hours from introduction of what it was to passing in both the House and the Senate,' Curran said. 'That's not transparent. That's not being upfront with the people of Illinois.'
Sen. Elgie Sims, Democrats' budget point person in the Senate, said, however, that the plan largely reflected what lawmakers had been discussing since Pritzker laid out his proposal in February.
'If there's one thing I do agree about with the other side of the aisle, it is that a budget is a statement of our priorities,' Sims said. 'And our priorities are being fiscally responsible, preparing for the future and facing the challenges that are coming our way head on.'
Heeding Pritzker's warning that he would veto a plan that relied on increases to the state's sales or income taxes, legislators approved a package that would employ one-time tactics, such as an amnesty for delinquent tax filers.
The revenue package also included increased taxes on tobacco products to 45% of the wholesale price. Starting in July, that higher tax will also apply to nicotine pouches, which have exploded in popularity in recent years, and e-cigarettes would be taxed at the same rate as other tobacco products for the first time. The revenue would go to tobacco health initiatives and the state's Medicaid program.
Democrats also approved a new per-wager tax on online sportsbooks, which would generate an estimated $36 million.
Overall, the spending and tax package would result in a slight surplus, Democrats said. Amid the late push to approve a tax-and-spending plan, the Senate also narrowly approved a proposal to overhaul governance and increase funding for Chicago-area mass transit. The plan included a $1.50 fee on retail deliveries, which replaced an earlier proposal to increase tolls on Chicago-area toll roads.
But the House adjourned without taking up the measure, meaning the transit issue remains unresolved.
A late push for legislation to aid the Chicago Bears with the team's proposed move to a new stadium in Arlington Heights failed to come to a vote in either chamber.
The spending package Democrats approved stuck closely to the broad outlines Pritzker presented to lawmakers in February. However, with revenue projections for the budget year that begins July 1 dimming in the months since the governor made his proposal, legislators approved some new ideas to bring in more money, including changes that would allow Illinois to tax offshore and out-of-state corporate profits.
One new funding stream would come from taxing 'large transnational corporations' that store assets overseas, Democratic Rep. Will Guzzardi of Chicago said.
'Those are the revenue sources we're contemplating to balance a budget that supports investments in children and families and seniors and people with disabilities,' he said.
The budget package included a tax amnesty program aimed at boosting revenue that was part of Pritzker's proposal. The program is expected to bring in $228 million, Guzzardi said, which is $30 million above Pritzker's initial estimate.
The spending proposal lawmakers approved, negotiated among the Democratic House and Senate leaders and the governor's office, deviates from Pritzker's original plan in certain areas, including funding for elementary and secondary education.
Pritzker proposed a $350 million increase as required under a 2017 school funding overhaul. But the final plan would boost funding by only $307 million over the current year, cutting $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.
The grant program was paused to provide 'the ability for us to have a study that talks about the efficacy of that program, making sure it is having the desired impact and reducing property taxes for hardworking homeowners across the state,' Sims said.
Democrats managed to gather enough support for their plan despite ongoing tension over the elimination of funding for the health insurance program covering noncitizens ages 42 to 64. When Pritzker proposed the cut in February, his office estimated it would save the state about $330 million from its general fund. The approved budget would preserve the portion of the program for those 65 and older, allocating $110 million for their coverage.
Eliminating funding for the younger group, which would end coverage for more than 30,000 residents, was unpopular among Latino lawmakers and progressives, but those blocs didn't end up withholding their votes from the final budget package.
Democratic Rep. Lilian Jiménez, one of the champions of the program, stressed the importance of making sure the health care networks in low-income communities that are often used by immigrants are adequately funded in the face of the cut.
'What we're trying to do is make sure that those communities have the resources they need to brace for the impact of having 30,000 uninsured throughout the state of Illinois,' said Jiménez, whose district includes heavily Latino portions of Chicago.
While many immigrants living in Illinois without authorization pay state and federal taxes that support the program and other services for which they are ineligible because of their citizenship status, a state audit released in February found that over three years the insurance program for older immigrants cost nearly double what was expected.
The budget would eliminate funding for a relatively new state program providing free test preparation to students at public universities and some community colleges, launched in late February after receiving $10 million in the current state budget.
Supporters said in early May that the program had already saved more than 200,000 students a total of roughly $8 million in just two months. When Illinois launched the program, it became the first state to offer free comprehensive test preparation for college students.
Democrats also 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 that spending level with the current year.The overall plan also would cut 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.
At the same time, some lawmakers pushed to boost funding for health facilities that serve low-income patients and communities, asking for $160 million for safety-net hospitals, though settling in the end for $118 million.
'There are significant increases, investments in our hospital systems. Our safety-net hospitals are on the front lines,' Sims said. 'They are caring for our most vulnerable. And we are making sure that we made investments in those safety-net hospitals because they carry a large volume of Medicaid clients. So, we want to make sure they have the resources necessary to be successful.'
The Democratic plan also included an 80-cent-per-hour wage increase for direct support professionals who work with people with developmental disabilities, but 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, Rose, the Mahomet Republican, said the reduction in hours was a 'cynical sleight of hand.'
Republicans also 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.
'Last year … we described that as a one-time, special occurrence. Now, we're doing it again,' Republican Rep. Ryan Spain of Peoria said during a Friday night House committee hearing. 'What happened to the one time occurrence?'
'We're in difficult times,' Gabel said. 'This is a hard budget. We felt like we needed to do it one more time.'
Both Republicans and Democrats pointed to the uncertain federal funding picture, with Republicans questioning spending in a 'doomsday budget' and Democrats blaming Trump for creating confusion for states.
Gabel said 'this budget is based on the information we have at this time.'
Despite the fiscal challenges the state faces, the Democratic plan included $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 B.S.,' 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.
'Start looking at these pages, people. There is so much pork in here,' C, lamenting that Republicans weren't given a chance to fund projects on behalf of taxpayers in their districts.
While House and Senate Democrats dodged Republican questions about the so-called pork-barrel spending, their legislation included funding for a number of large projects in Democratic districts.
For instance, Proviso Township High School District 209, which is in House Speaker Emanuel 'Chris' Welch's district and where he previously was school board president, would receive $40 million for 'costs associated with capital improvements and an outdoor sports complex at Proviso West High School.'
Members of the GOP also criticized proposed pay raises of about 5% — to a base salary of $98,304 — for lawmakers, though in the past they've largely accepted the pay increases even when voting against the budget.
The raises are cost-of-living adjustments included in state law, though past legislatures have voted to freeze their own pay — a move that has drawn legal challenges.
The plan includes similar increases for the governor, other statewide elected officials and the heads of state agencies. Pritzker, a billionaire Hyatt Hotels heir, does not take a state salary.
The Senate-approved plan to address a looming $771 million fiscal cliff for the Chicago area's mass transit system and to overhaul the system's disjointed board structure moved away from a proposed increase on Chicago-area toll roads in favor of a new $1.50 fee on retail deliveries. That came after labor groups and suburban officials criticized the proposed toll increase.
The so-called 'climate impact fee,' which also was introduced late Saturday just hours before winning approval in the Senate, would kick in on Jan. 1 and could increase with inflation in future years. It would be imposed for each order, regardless of the number of items, but would not apply 'to the delivery of groceries and prescription and non-prescription drugs and medications.' Retailers with total sales of $500,000 or less in the preceding calendar year would also be exempt.
Even before the proposal was officially filed, the fee had drawn opposition from business groups, including the Chicagoland Chamber of Commerce, Illinois Chamber of Commerce, the manufacturers', restaurant and retail associations, and the big-tech interest group TechNet.
'This new, regressive tax will undermine consumer savings from the recent elimination of the grocery tax and would disproportionately impact communities that rely on delivery services to receive vital items,' the groups said in a statement.