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Illinois Gov. J.B. Pritzker’s $52.7B budget proposal would revamp state's pension system

Illinois Gov. J.B. Pritzker delivers his annual budget address on Wednesday, Feb. 21, 2024, at the statehouse in Springfield, Ill.
Brian Munoz/St. Louis Public Radio
St. Louis Public Radio
Illinois Gov. J.B. Pritzker delivers his annual budget address on Wednesday, Feb. 21, 2024, at the statehouse in Springfield, Ill.

Gov. J.B. Pritzker on Wednesday unveiled a $52.7 billion spending plan that includes the blueprint for a pension overhaul, funding for the migrant crisis and the creation of a child tax credit.

The Democratic governor planned to deliver his sixth joint State of the State and budget address at noon before the Illinois General Assembly.

According to Pritzker’s budget officials, the budget proposal includes $52.2 billion in revenue and $52.7 billion in spending — a 2% increase from last year. Officials on Wednesday morning called the plan a “more austere budget than in recent years” — which also maintains a promise of fiscal responsibility.

There will undoubtedly be sticking points for some of the governor’s priorities, however, including funding for migrants and the health care costs for the undocumented.

Revenues for the new fiscal year, which begins on July 1, are estimated to total $52.993 billion — a $777 million or 1.5% increase from revised estimates. New revenue proposals from Pritzker’s budget include an increase in the sports betting tax from 15% to 35%, which would add $200 million.

The plan also includes transferring mass transit costs from sales tax to the state’s Road Fund, to take in an additional $175 million.

Pritzker’s budget team is also aiming to hasten the state’s pension funding ramp with an eye toward landing another credit upgrade from Wall Street ratings agencies.

Since 1994, the state has been on a slog toward filling the gap in the grossly underfunded system to 90% by 2045. Pritzker’s team is adjusting that goal to reach 100% funding by 2048 — closer to pension goals set by many other states.

The governor’s team says they can make that happen in part with savings from paying off two other major bonds issued by the state over the next decade. Pritzker will need legislative approval for the pension proposal.

Pritzker also wants to more than double the state tax on sports betting revenue collected by casino sportsbooks from 15% to 35%, a proposal that’s sure to draw pushback from a rapidly expanding industry that raked in more than $1 billion in 2023. The governor’s team predicts such a hike could pump an additional $200 million into state coffers.

The governor’s budget includes funds for some of his top priorities, including $181.7 million to continue to fund the migrant crisis, and $629 million to continue providing healthcare benefits to undocumented people aged 42 and up who would otherwise qualify for Medicaid.

Those two issues are likely to create some tension within the Republican caucuses.

Education funding would include $350 million towards the state’s school funding formula — although advocates have been warning they would put up a fight for more than that statutory yearly funding requirement. The total K-12 funding under the governor’s proposal totals $10.8 billion in general funds.

The budget includes $2.55 billion for higher education with an increase of $10 million toward the Monetary Award Program (MAP).

The proposed budget creates a $12 million child tax credit for lower-income families with children under age 3, for a credit of about 20% of the taxpayer’s state earned income.

The spending plan sets aside $175 million for the state’s “rainy day” fund, an emergency piggy bank that has gone from nearly insolvent in 2017 to $2.3 billion by next year, if passed by the General Assembly.

The budget also includes $10 million in federal funds toerase $1 billion in medical debt for Illinois residents — the first in a three-year plan.

Budget negotiations are expected to continue through the end of May, the deadline for lawmakers to pass a spending plan.

This is a developing story and will be updated.

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