SPRINGFIELD — Illinois House Democrats early Wednesday approved a $53.1 billion election-year budget that boosts spending by $400 million from what Gov. J.B. Pritzker proposed earlier this year and slightly reduces the governor’s tax hike plan.
The plan also provides a 5% pay bump to lawmakers and many state officials, one of many expenditures that drew the ire of the Republican minority, who voted against the budget but will receive the raises nonetheless.
Hours after returning to Springfield from a truncated Memorial Day weekend, the House approved the budget in a 65-45 taken at about 2 a.m. The Democratic-controlled Senate gave its approval late Sunday on 38-21 vote, largely along party lines, after lawmakers blew through a self-imposed Friday deadline without reaching a final agreement. While details still were being hashed out, the House sent members home late Saturday.
The final plan for the fiscal year that begins July 1, which now heads to the governor’s desk, trimmed some areas of Pritzker’s initial proposal but is undergirded by almost $750 million in tax hikes on sportsbook, retailers and other corporations. Pritzker, who was involved in negotiations with legislative leaders that led to the budget approved by lawmakers, had proposed some $900 million in tax increases as part of a $52.7 million spending plan.
While seven House Democrats joined Republicans in opposing the main budget bill, party leaders managed to keep the deal on track despite a last-minute lobbying push from banks, airlines and credit card companies against a late-breaking move to eliminate transaction fees charged on sales tax and tips, a provision meant to soften the blow for retailers, who are getting a tax hike as part of the overall budget plan.
Democrats struggled to marshal the votes necessary to pass the tax increases needed to bring their spending plan into balance. Three votes were taken before the package passed by the bare minimum number of votes.
Earlier, state Rep. Jehan Gordon-Booth of Peoria, the House Democrats’ chief budget negotiator, emphasized that the budget’s priorities in education, after-school programs, health, public safety, including funding for community-based violence prevention groups and Illinois State Police cadet classes, and other areas.
While seven House Democrats joined Republicans in opposing the main budget bill, party leaders managed to keep the deal on track despite a last-minute lobbying push from banks, airlines and credit card companies against an 11th hour move to eliminate transaction fees charged on sales tax and tips, a provision meant to soften the blow for retailers, who would be hit with a tax hike as part of the overall budget plan.
State Rep. Jehan Gordon-Booth of Peoria, the House Democrats’ chief budget negotiator, noted the budget’s priorities in education, after-school programs, health, public safety, including funding for community-based violence prevention groups and Illinois State Police cadet classes, as well as other areas.
“Ladies and gentlemen, this is a budget that prioritizes all of our communities. We’re funding housing. We’re funding rental assistance. We’re providing over $500 million in new funding for local governments,” Gordon-Booth said on the House floor. “I know that we stand committed to continuing in the vein of moving our great state forward.”
In her closing remarks, Gordon-Booth acknowledged the trade-offs that went into putting together the plan.
“No one, and I mean no one, is getting everything that they want. Some very difficult decisions were made. And I hope that people respect that. But I truly believe that this budget puts Illinois forward,” Gordon-Booth said. “Because we aren’t going to be about the politics of pitting vulnerable people against one another, we are going to be about the business of lifting all of our people up.”
Pritzker issued a statement shortly after the vote, praising the plan and vowing to sign it once it reaches his desk.
“For the sixth consecutive year, the General Assembly and I have a balanced budget that uplifts the working families of Illinois, saves more money in our Rainy Day fund, creates jobs, lowers taxes on small businesses, grows our economy, and continues our track record of fiscal responsibility,” Pritzker said. “From expectant mothers and their newborn babies to people with disabilities to veterans to seniors who need our care, we’re keeping our promises to all Illinoisans and the most vulnerable among us.”
Republicans, who are outnumbered 77-40 in the House and were largely shut out of negotiations, continued their criticism of budgets that have ballooned since Pritzker took office in 2019, when the approved spending plan totaled $40 million.
House Republican leader Tony McCombie issued a statement blasting the budget as a “negligent political document” that she said was filled with “bloated political projects, taxpayer-funded benefits for noncitizens, and politician pay raises, which come at the expense of the state’s most vulnerable residents.”
Rep. Norine Hammond, a Republican from Macomb in west-central Illinois, said on the House floor that over the past several years, the budget has become “an exercise in bullying and absolute power” on the part of the Democratic Party that has total control of state government.
Pointing to the legislative pay raises and to pork-barrel projects that are monopolized by Democrats, Hammond said the members of the majority party have acted out of their own self-interest. “They’re here for what’s in it for them,” she said.
Rep. Lindsey LaPointe, a Chicago Democrat, pushed back on Hammond’s comment, saying, “We all represent 108,000 people. I am not here for myself.”
“I don’t think anyone on that side of the aisle is here for themselves either,” LaPointe said. “We are here for a purpose: to fight for what we believe in.”
Highlights of the measures headed to the governor’s desk include a slight hourly boost for service providers who help the developmentally disabled and a more generous child tax credit. Lawmakers removed from the spending plan Pritzker’s proposal to lower a built-in annual increase to the standard state income tax exemption, which experts said would have harmed lower-income families.
The spending plan includes the minimum $350 million annual increase in funding for elementary and secondary education laid out in the state’s school funding formula. The increase helps bring total K-12 spending from the state’s general fund to about $10.8 billion. The budget also calls for making the legally required pension payment of about $10 billion.
The budget also includes $14 million for the Department of Early Childhood, the new agency that both the House and Senate voted to create, and sets the salary for the new agency’s secretary at $215,000 per year.
Chicago Mayor Brandon Johnson stopped in Springfield earlier this month to lobby for his administration’s requests, but the budget approved by lawmakers reflected little of a mayoral wish list that included a request for an $1 billion increase in funding for Chicago Public Schools.
The plan does include the $182 million Pritzker proposed to dedicate toward the ongoing migrant response as part of an agreement with Johnson and Cook County Board President Toni Preckwinkle announced earlier this year.
Chicago also will benefit from other areas of the budget that are intended to give local governments a boost, Democrats said.
Lawmakers and many top state officials will see 5% raises, boosting annual pay for all 177 members of the Illinois General Assembly to $93,712. Many lawmakers also receive stipends for holding leadership positions or chairing committees. The raises also affect all constitutional offices — the governor, lieutenant governor, secretary of state, attorney general, comptroller and treasurer — and heads of executive agencies.
Pritzker, a billionaire heir to the Hyatt Hotels fortune, does not collect a salary as governor and last year he used his veto powers to reduce pay increases for the lawmakers, statewide elected officials and agency heads after the legislature approved raises that were above limits set in state law.
Also tucked in the budget package was $900 million in capital funds for the rebuilds of Stateville and Logan correctional centers, which the governor announced earlier this year. The Department of Corrections has proposed to move the Logan women’s prison onto Stateville’s campus as part of the multiyear plan.
Rep. Bill Hauter, whose district includes the Logan prison, said while he agrees that the facility that has been neglected for many years needs to be demolished, rebuilding it in a Chicago suburb is not the answer. He said he is pressing for the prison to be rebuilt in Logan County so the economic benefits generated are not lost from the region.
“This budget highlights a growing trend that our downstate communities will be ignored like Logan, then unfairly defunded and then depopulated of jobs in the majority party’s thirst to consolidate their power, their funding and jobs to the people and places that are most politically favorable to them,” the Morton Republican said.
To help support a budget that’s about $2.7 billion higher than the current spending plan, Democrats approved tax package expected to bring in an estimated $750 million in new revenue. It took three votes and a move to suspend a House rule limiting lawmakers to two do-overs for Democrats to round up the votes necessary to pass the tax package.
“I think it should be clear to everyone in this state what this supermajority is willing to do to ram a tax increase down the throats of the citizens of Illinois at 4:30 in the morning,” GOP Rep. Patrick Windhorst of Metropolis said just before the final vote.
The final figure of the package was lower than Pritzker’s tax hike proposal in part because lawmakers ditched the governor’s plan to bring in $93 million in additional revenue by lowering a built-in annual increase to the standard state income tax exemption, which would have resulted in slightly higher income tax bills for many taxpayers. Since the exemption is the same regardless of income, some experts previously said the proposal would have been harder on lower-income families.
But most of Pritzker’s flagship proposals for corporate tax hikes made it into the final package, including caps on sweeteners for retailers and other corporations. A portion of the tax increases would be offset by a series of new tax credits included in the revenue package.
The state sports betting tax — currently a 15% levy on post-payout revenue — would be raised using a tiered structure, with the largest sportsbooks paying a 40% tax and the smallest paying 20%. The change is expected to bring in $200 million in new operating revenue, about the same as the 35% flat across-the-board tax included in Pritzker’s original proposal.
The largest share of the new revenue — an estimated $526 million — would come from continuing to cap the losses large corporations can write off on their state income taxes.
The plan also would limit the tax discount retailers receive for collecting sales tax, which would bring in about $101 million in additional revenue.
While retailers have pushed back in the past when Pritzker and other governors have proposed capping the sales tax discount, the Illinois Retail Merchants Association went along this time because it struck a deal to eliminate credit card fees on the portion of transactions that includes sales tax and tips.
Rob Karr, president of the retailers group, said banks collect many other fees and that the change proposed by the legislature will result in a fairer system.
But banks and other financial institutions were incensed by the move, which they found out about only days before it was approved by legislators.
“To have one state come in and pass this and upend the global payment system as we know it, just for a fractional amount of monetary benefit for merchants, just is not an idea that should be done without proper consideration,” said Ben Jackson, executive vice president of government relations at the Illinois Bankers Association.
The proposal on credit cards was vigorously opposed by the banking association and the Illinois Credit Union League, along with American Airlines, United and Southwest, which all operate airline credit cards. Opponents say it would create a burdensome and expensive implementation process that would lead to a worse experience for consumers.
American, Southwest and United airlines on Monday sent a letter to Pritzker, Senate President Don Harmon and House Speaker Emanuel “Chris” Welch, asking them to reject the proposal.
“This legislation would make Illinois a global outlier in how it treats payments to the detriment of businesses and consumers,” the letter said, because it would require payments to be split up into multiple parts: the merchandise, sales tax and gratuity.
Jackson called the credit card proposal an “11th-hour deal that’s been injected into a very important set of bills.” He said he heard from the governor’s office on Thursday — the day before the General Assembly’s self-imposed deadline to pass a budget — that it would be included in the package and was non-negotiable. The language was released on Saturday.
Jackson said his organization had lobbied to have the legislature study the issue instead of implementing the change right away, but lawmakers rejected that proposal.
Opponents see constitutional problems, including interstate commerce issues, he said. That could set the stage for possible litigation if the governor signs the measure into law.
Democratic Rep. Margaret Croke of Chicago voted for the revenue package in a House committee Tuesday night but called the expected July 1, 2025, implementation date of the credit card change “crazy” and said the chamber needs to be open to amendments in the fall veto session.
“We need to be open to the fact that this proposal was done very last minute, and we need to be okay with amending it so that we can implement it,” Croke said in an interview. “I also think that there is the chance of legal challenges, and if we’re opening up the state to potential lawsuits, that’s something we’ll also have to address in the fall.”
Making good on a vow Pritzker made in his February budget address, the legislature voted to eliminate the 1% statewide grocery tax, something voters are sure to hear about frequently between now and the November general election, despite the fact the tax will remain in place until Jan. 1, 2026. The delay is intended to give local governments, who receive the revenue from the tax, time to prepare.
Residents in some parts of the state may continue seeing the tax added to their grocery bills, however. To make up for the lost revenue, municipalities — both those like Chicago with broader home-rule powers to raise taxes on their own and non-home-rule communities — would be granted the ability to levy their own 1% tax on groceries. Towns without home rule would be given the ability to tack on an additional 1 percentage point tax on general retail sales without having to ask voters to approve the increase through a referendum.
As an added benefit for municipalities, the budget package also includes $600 million in funding for local road projects.
Another component that would benefit lower-income Illinois residents is the creation of a state child tax credit, a measure lawmakers beefed up from Pritzker’s original proposal.
The budget plan calls for a child tax credit that will cost the state $50 million in the upcoming fiscal year and $100 million in following years, and it would also cover families with children younger than 12.
Pritzker’s proposal in February, however, was for families with children under 3 and was estimated to cost the state $12 million.
In another move that will bolster Pritzker’s and the legislature’s progressive bona fides, lawmakers approved a measure, championed by the governor, that would purchase Illinois residents’ medical debt at a discount, which the governor’s office says could fund exponential debt relief for hundreds of thousands of families.
“No Illinoisan should face financial ruin after receiving the medical care they need,” Pritzker said in a statement after the bill passed 73-36 through the House late Tuesday night. “Together, we are on track to restore financial security to hundreds of thousands of Illinoisans who are suffering under the weight of unpaid debt as they recover from illness and injury.”
The legislature also passed some Pritzker’s key finance initiatives, including a sweeping business development measure aimed at boosting Illinois’ standing in the quantum computing field, among other goals.
State officials have said the legislation would help a proposed quantum campus attract up to $11 billion in federal funding and an estimated $20 billion in private investment. The bill would create an enterprise zone — a tax incentive program administered by the state’s Department of Commerce and Economic Opportunity — to provide building materials, sales and other tax exemptions for the campus.
Petrella reported from Chicago.
