Pritzker signs budget, income tax rates bill for his ‘fair tax’ plan — touts ‘new era of fiscal stability’

Pritzker signed the income tax measure, as well as three budget bills — the operating budget, the revenue for the spending and a budget implementation measure. And part of that spending plan includes a controversial measure: a cost-of-living $1,600 pay bump for lawmakers.

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Gov. J.B. Pritzker on Wednesday signed into law his first budget — a $40.1 billion spending plan — alongside a measure that sets the income tax structure should his preferred graduated income tax plan clear a 2020 ballot referendum.

Handing Pritzker a huge political win, the Illinois General Assembly last month approved a constitutional amendment that will ask voters whether they want to change the state’s flat income tax structure and replace it with one in which higher income taxpayers pay more. That resolution did not need Pritzker’s approval.

Calling it a “a new era of fiscal stability has arrived in Illinois,” Pritzker signed the budget at a signing ceremony, surrounded by legislators and members of his administration.

“This is a watershed moment for Illinois,” the rookie governor said, crediting Democrats and Republicans alike for passing the budget, although there were no Republicans at the signing. “There are far too many people to thank.”

Pritzker took a victory lap for all the bills passed in the overtime legislative session, including legalization of marijuana, a capital bill and a balanced budget.

“I worked with the General Assembly, and we came together to think big and get big things done,” he said.

Gov. J.B. Pritzker signs revenue and budget bills in 2019

Flanked by supporters, Gov. J.B. Pritzker signs revenue and budget bills during a press conference at the James R. Thompson Center, Wednesday afternoon.

Ashlee Rezin Garcia/Sun-Times file

The measure he signed on Wednesday included the income tax rates, setting the stage for an amped up public awareness campaign via Pritzker’s dark money group, Think Big Illinois, and the other side of the debate, Ideas Illinois.

In total, Pritzker signed the income tax measure, as well as three budget bills — the operating budget, the revenue for the spending and a budget implementation measure.

And part of that spending plan includes a controversial measure: a cost-of-living $1,600 pay bump for lawmakers. The governor on Tuesday told reporters he planned to sign the budget as-is, without taking that provision out. The Senate voted to exclude the pay bump, but the Illinois House failed to take up that exclusion, making it moot.

Flanked by supporters, Gov. J.B. Pritzker signs tax legislation in June of 2019.

Flanked by supporters, Gov. J.B. Pritzker signs fair tax legislation, SB 687, during a press conference at the James R. Thompson Center, Wednesday afternoon, June 5, 2019.

Ashlee Rezin Garcia/Sun-Times file

It took former Republican Gov. Bruce Rauner three years into his term to sign his first full-year budget, amid a war over his legislative agenda and an ensuing and devastating impasse.

“Wow, what a difference a year and a governor makes,” said state Sen. Heather Steans, D-Chicago, who helped shepherd Pritzker’s budget through the Senate.

State Sen. Toi Hutchinson, D-Olympia Fields, stressed that the budget and other bills passed represent what voters told her and the governor they want.

“Our problems are way too big to think small,” she said. 

The governor’s office say the budget is both “balanced,” but also will generate a $150 million surplus to help pay down the state’s $6.15 billion backlog.

This year’s budget is $1.14 billion higher due to more payments going to debt, education funding and for services for children, according to an analysis from Senate Democrats. It also includes a $50 million increase in early childhood education from last year’s budget.

For higher education, it provides $52.8 million more for public universities than last year. And it gives an additional $50 million for the Monetary Award Program, or the MAP grant program. In total, $451 million will go towards the program.

The budget makes a full $8.4 billion pension payment, which is about $665 million more than last year. Senate Democrats noted that the state has made its full pension payments without borrowing for seven years in a row, “the longest period of consistent obligation payments in contemporary history.”

The state’s Department of Children and Family Services will get an additional $80 million compared to last year, to hire more staff and caseworkers.

Gov. J.B. Pritzker signs Rebuild Illinois plan into law June 28, 2019.

Gov. J.B. Pritzker signs revenue and budget implementation legislation during a press conference Wednesday.

Ashlee Rezin/Sun-Times

Public safety — which includes the Department of Corrections, Illinois State Police and the Prisoner Review Board — will get $136 million more than last year, with the total at $1.89 billion in spending.

Human services will receive $6.55 billion, including expenses associated with Medicaid, which is an increase of $567 million compared to last year’s budget. Among that amount, $14.5 million will go to a breast and cervical cancer screening program and $1.3 billion to DCFS.

Another budget measure signed into law was pushed by House Republicans and includes reforms requested by the business community. To bring in $80 million and $20 million for local governments, a policy within the measure would ensure that third party sellers, such as those who sell products through online marketplaces like Amazon, are compliant with state laws regarding sales tax. The measure also includes a provision that creates a tax amnesty program that permits delinquent taxpayers to pay their overdue tax bills without penalty. That would be applied for taxpayers who owe state taxes from June 30, 2011 to July 1, 2018. It also creates an amnesty program for any tax owed under the franchise tax or license fee liabilities. In total, the amnesty programs are estimated to bring in $175 million.

The reform measure also eliminates the franchise tax, which is a tax on exercising a franchise in Illinois, or for foreign corporations, a tax on doing business in Illinois.

Although the budget bills were passed with some Republican support, not all are on board amid concerns over the reliance on taxation, among other problems.

“Today’s bill signing is a bad day for Illinois taxpayers,” state Rep. David McSweeney, R-Barrington Hills, said. “The Pritzker policies of higher taxes, out of control state spending and legislative pay raises will be very harmful to Illinois citizens. Republican insiders who supported the Pritzker budget should be ashamed of themselves. I will continue fighting for lower taxes, less spending and real reform.”

Meanwhile, the income tax measure which the governor signed would tax income between $250,000 and $500,000 at 7.75 percent. Income from $500,000 to $1 million would be taxed 7.85 percent and income over $1 million would be taxed 7.99 percent. Senate Democrats changed up the governor’s rate plan slightly in separating rates for single and joint filers, an issue many brought up when Pritzker unveiled his preferred rates in March. The corporate tax rate within the package would also be raised to 7.99 percent.

Gov. J.B. Pritzker signs income tax legislation during a press conference

Gov. J.B. Pritzker signs income tax legislation during a press conference at the James R. Thompson Center, Wednesday afternoon.

Ashlee Rezin/Sun-Times

Under current law, all personal income is taxed at 4.95 percent and corporate income at 7 percent.

And again, signaling not all are on board with Pritzker’s plan, Illinois House Republican Leader Jim Durkin called the graduated income tax rates “simply the next step to giving Illinois Democrats a blank check for uncontrolled spending for years to come.”

“Illinois families should remain very wary on the rates that are being ‘promised’ today – as Democrats will continue to come back, year after year, and pickpocket more money from Illinois families and businesses,” Durkin said in a statement.

Ideas Illinois, the dark money group hoping to fend off the graduated income tax change, criticized Pritzker’s pairing of the budget and tax rate measures.

“The voters need no further proof of what will happen if the Governor’s Blank Check Jobs Tax becomes law – today, in one sitting the Governor of Illinois signed into law a pay increase for Springfield politicians while simultaneously asking middle class families to give he and Speaker Madigan a blank check with their hard-earned tax dollars,” Ideas head Greg Baise said in a statement.

Pritzker must still sign major bills into law, including the capital plan, marijuana legalization and the Reproductive Health Act, a controversial abortion measure that was intended to strengthen the state’s abortion laws in light of anti-abortion efforts in other states.

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