Citing an improving economic outlook amid the COVID-19 pandemic, Governor JB Pritzker’s latest budget proposal will earmark an additional $500 million for near-insolvent Illinois pension funds, inject $200 million into a “day of rain” and reduce the unpaid state bill. backlog — while offering $1 billion in tax cuts, freezes and refunds, administration officials said Wednesday.
Pritzker was scheduled to outline the ambitious $45.4 billion election-year spending plan during his midday “state of the state” address in Springfield, at a scaled-down event at the Old State. Capitol Building due to a huge winter storm sweeping the state.
In a media preview ahead of the speech, the governor’s top advisers claimed the new spending plan keeps the state on track to end in the black for consecutive years for the first time in 25 years.
And by committing an additional half a billion dollars to pension funds, it would be the first time since 1994 that Illinois would contribute more than its legally required annual payment – which doesn’t have much impact on unpaid bonds. capitalizations that soared more than $144 billion in 2020, but a move that will save the state $1.8 billion in the long run, administration officials said.
Budget officials revised their estimate for the current fiscal year ending June 30 to close with a $1.7 billion surplus that will be used to pay down some of the state’s huge accumulated debt.
The governor’s office says this will help reduce the state’s backlog of unpaid bills to about $2.7 billion by the end of the next fiscal year, from nearly $9 billion in mid-2020.
Pritzker will also offer to use $600 million from the current year surplus and $200 million from next year’s budget for Illinois’ “rainy day” fund, which has not seen liquidity injection for 18 years.
The fiscal measures are offered with an eye on Wall Street credit rating agencies which have issued some of their first credit upgrades to the state in decades under Pritzker – which would surely welcome another boost before a tough re-election battle.
Pritzker’s office says they can do all this while offering nearly $1 billion in tax relief to families feeling the “pinch” of inflation. This includes $495 million in combined savings by suspending a 1% tax on groceries and freezing a planned gas tax increase, while providing $475 million in property tax refunds to owners. About 2 million residents would be eligible for these rebates, with direct payments of up to $300 each.
Administration officials say the still-cash-strapped state is on better financial footing after negotiations with state workers’ unions and health insurance companies to save about $1.2 billion in health care expenditures for employees and retirees. The sale of state properties and the termination of leases also bolstered funds, while reducing interest payments as debts fell.
Federal COVID-19 relief dollars have also helped the state make ends meet over the past two years. About $3.5 billion of those funds will remain after the next fiscal year, although some of those dollars will go directly to local governments.
Here’s a preview of the budget proposal provided by Governor JB Pritzker’s office:
This is a developing story. Check back soon to learn more.