Pritzker vows savings from tax moves affecting businesses — but GOP says he’s hurting firms needing ‘more relief,’ not less
Gov. J.B. Pritzker argues that the tax credits came on top of others the firms were already receiving for expanding or relocating – money the state now needs in the light of COVID-19’s hit on state finances.
SPRINGFIELD — Gov. J.B. Pritzker announced Friday he’s freezing the implementation of new business tax credits and calling for legislators to stop changes to the state’s income tax framework to save coronavirus-ravaged Illinois just over half a billion dollars.
Outraged Republicans called it “just one more hit” for struggling business owners.
The new, expanded state tax credits would have cost the state $20 million annually, according to the governor’s news release announcing the freeze and proposal. They were authorized in 2019 as part of a series of tax changes that were scheduled to take effect at the start of this year.
But the governor argues that the tax credits came on top of others the firms were already receiving for expanding or relocating — money the state now needs in the light of COVID-19’s hit on state finances.
In addition, Pritzker’s proposal would keep the state’s income tax system the same as it was before Congress amended federal income tax codes last March as part of the Coronavirus Aid, Relief and Economic Security, or CARES, Act. The federal changes would have allowed businesses to deduct operating losses immediately rather than over an extended period of time.
Following the federal changes could reduce Illinois income tax revenue by more than $500 million — money saved by “decoupling” the state tax code from the federal, Pritzker said.
So, together, ignoring the federal tax changes and suspending the tax credits would save the state $520 million.
In a statement, Pritzker said his administration understands that there are many challenges facing businesses, but the state is facing its own challenges.
“Unfortunately, COVID also hit our state budget, requiring tough choices about what we can and cannot afford,” the governor said. “Right now, we cannot afford to expand tax breaks to businesses that already receive tax breaks. As we recover from the pandemic, we must focus on job creation and balancing our state budget. I am confident in our ability to grow our economy and put our state on firmer fiscal footing.”
Pritzker went on to say the budget cuts he announced last month, along with these new rollbacks of corporate tax credits, are “just the first steps in this budget process. More will be necessary” which could mean the roll back of other corporate tax breaks, the governor said.
Republicans in Springfield for the first day of the lame-duck legislative session immediately objected to the Democratic governor’s plan.
“We have businesses contacting us every day, asking for more and more relief, and for the governor to decide that the state’s bottom line is more important than these businesses’ bottom line is something that we’re really outraged by,” said state Rep. Avery Bourne, R-Morrisonville, knocking Pritzker for unveiling the proposal in a news release rather than discussing it with the Legislature.
Appearing at a news conference with Bourne, House Deputy Republican Leader Tom Demmer called the proposal “a scramble for short term revenue.”
“Let’s deliver relief to businesses impacted by COVID, and let’s deliver a tool to Illinois to help us attract new investments and new jobs as we rebuild coming out of this pandemic,” the Dixon Republican said at the Bank of Springfield Center, where the House is meeting to allow adequate space for social distancing.
Last month, Pritzker authorized more than $711 million in budget cuts in offices under his control for the current fiscal year in an attempt to close a nearly $4 billion budget gap.
The state’s budget office projected Illinois’ fiscal problems would continue for the next few years — the office projected deficits ranging from $4.8 billion in fiscal year 2022 to $4.2 billion by fiscal year 2026, according to a report on the state’s economic and fiscal policy released in November.