Pritzker Speeds Through the Honeymoon Period
Pritzker’s promise of a bridge to a stable fiscal future still leaves a lot of potholes to avoid.
Marty Green, Esq.
ICPAS VP of Government Relations
Illinois’ 34th governor is off to the races. Gov. J.B. Pritzker wasted no time during the typical
honeymoon period in office and instead began advancing his gubernatorial agenda with quick
executive orders and a consolidated constitutionally required budget address that was
blended with the State of the State Address.
In his first state operating budget, Pritzker proposed a host of new taxes to build Illinois a
“bridge to a stable fiscal future.” In dealing with an estimated $3.2 billion budget hole, Pritzker
is calling for $1.3 billion in new revenues from new or increased taxes on legalized recreational
marijuana, sports betting, e-cigarettes and cigarettes, plastic shopping bags, and managed
care organizations. Pritzker is eyeing some savings by phasing out the private school
scholarship credit, imposing a progressive tax on video gaming, capping the retailer sales tax
discount at $1,000 per vendor, offering a delinquent tax amnesty program, and decoupling
from the federal repatriation tax credit.
Pritzker’s budget proposal also extends the state public pension ramp payments by seven
years and infuses the system with cash by selling off unspecified state assets, which could
save $878 million. Pritzker further proposed selling another $2 billion in general obligation
bonds to pay down the state’s bills and reduce interest payments and further savings could
come from lowering the interest rate in the state Prompt Payment Act.
However, successfully amending the Illinois Constitution to replace the state’s flat income tax
with a graduated income tax is also central to Pritzker’s long-term plan to stabilize the state’s
finances and public pension plans. This is a potentially contentious position to be in. The
mechanics of moving to a graduated income tax requires both the Illinois House and Senate to
pass a Joint Resolution Constitutional Amendment (JRCA) by a three-fifths majority vote, which
the Democrat supermajorities in each chamber could readily pass without Republican votes.
Providing the JRCA passes both chambers, the decision will turn to Illinois voters in the
November 2020 General Election. If voters approve the amendment, the General Assembly
would need to pass legislation establishing income tax rates, and a graduated income tax
could likely go into effect in 2021.
The premise of a graduated income tax is that high wage earners pay higher tax rates,
increasing tax revenues for the state’s coffers. Putting this into motion requires a heavy lift,
but I suspect the issue will be put on a legislative fast track because Pritzker’s proposal hinges on it. In fact, Illinois Senate President
John Cullerton has already indicated a
willingness to move away from past JRCA
voting practices to have the Senate vote on
the amendment this year.
While not as austere as many Republicans
would have wished, Pritzker’s budget
proposal highlights the stark realities of
Illinois’ fiscal situation. Without judging the
merits of the governor’s proposals, he has
at least shown a willingness to make tough
decisions to bring short- and long-term
fiscal stability to Illinois.
It’s no secret that our past elected officials
have generally avoided making the tough
decisions needed to truly restore Illinois to
long-term fiscal stability. Maintaining the
status quo and kicking the can down the
road has only exasperated Illinois’
downward spiral. You don’t need me to tell
you that real solutions to Illinois’ problems
are not easy and will not be pain free. In
fact, we are all likely to feel some pain in
various forms, whether it be increased
income taxes, paying for shopping bags,
increased healthcare costs, reduced state
services or programs, or something else.
Illinois voters elected Pritzker to execute on
his campaign platform and promises, which
included big causes, like increasing the
state’s minimum wage, moving to a
graduated income tax, and reforming the
state’s pension system. He has shown
leadership, taking quick action and
bringing proposals to the General
Assembly. To little surprise, Pritzker’s first
major victory came by way of working with
Democrats in the House and Senate to
pass a graduated $15 per hour state
minimum wage. But Pritzker knows that he
cannot solve Illinois’ problems alone and
that bi-partisanship is needed — he has
appointed Republicans to his cabinet and
has reached out to Republican legislators.
Still, aside from the enormity of the issues
above, the challenge will always be
bridging the political divide in the General
Assembly. Let’s hope that partisan gridlock
can be avoided, and our elected officials
can collectively work together on resolving
our state’s critical issues and making the
tough decisions that will ultimately turn
Illinois around and put us all back on the
road to prosperity.
Author’s Note: This column includes my personal
observations of the evolution of the legislative
environment and are not necessarily the views of
the Illinois CPA Society.