Legislative Update
Democratic Governor JB Pritzker delivered his sixth Budget and State of the State address to a joint session of the Illinois General Assembly Wednesday. During the speech, Pritzker touted his Administration’s accomplishments, highlighting nine credit upgrades, a $2 billion investment in the Rainy-Day Fund, and the elimination of the past-due bill backlog. While acknowledging Illinois is facing more fiscal challenges than in years past, he cautioned legislators to, “not let the doom grifters steal your optimism about what’s ahead for Illinois. Our future is bright, and opportunity lies ahead.”
Pritzker proposed an FY25 All Funds appropriation of $123.2 billion, including $52.7 billion in General Funds, which is a $752 million, or nearly 2%, GRF increase over FY24 estimated expenditures. The Governor’s revised FY24 estimated spending reflects proposed spring supplemental appropriations of $1.183 billion and proposed transfers, so the proposed GRF increase over last fiscal year’s enacted budget is a $2.3 billion increase, or 4.5%. The Governor’s FY25 spending plan contains a $298 million GRF surplus, with $170 million reserved for the Budget Stabilization Fund.
Overall, the FY25 budget assumes $52.993 billion in general revenue, which is a $777 million increase (1.5%) compared to revised FY24 revenue estimates. On a positive note, state-sourced revenue sources, including the personal income, corporate income, and sales taxes, are expected to increase by $1.399 billion (3%) over FY24. However, those increases are offset in FY25 due to one-time transfers-in that occurred in FY24 are not expected to repeat in FY25.
The Governor’s FY25 budget assumes new revenue from the following sources, which will require statutory change by the General Assembly.
Net Operating Loss: continues the limit on the Corporate Net Operating Loss Deduction, increases the cap to $500,000, and extends the limit through tax year 2027. This will generate an additional $526 million for FY25.
Retailer’s Discount: imposes a $1,000/month cap on the Sales Tax Retailers Discount, which will generate an additional $101 million GRF and $85 million for local governments.
Sports Wagering: raises the sports wagering licenses tax from 15% to 35%, which will generate an additional $200 million. 15% of the tax would continue to be transferred into the Capital Projects Fund to help pay debt service; 20% would be transferred into the General Revenue Fund.
Standard Deduction: sets the standard deduction at $2,550 for tax year 2024, and adjusts for cost-of-living for future tax years, which will generate an additional $93 million.
Mass Transit: shift the GRF cost for Mass Transit onto the Road Fund, which will generate/save GRF $175 million.
The Governor also proposed tax reductions that will offset the revenue enhancements.
Franchise Tax: allow the first $10,000 in liability to be exempt from the Franchise Tax. $10 million cost
Child Tax Credit: create a refundable child tax credit equal to 20% of a taxpayer’s state earned income tax credit if the taxpayer has a child under the age of 3. $12 million cost
Eliminate Grocery Tax: eliminate the state 1% grocery tax. $325 million cost to state and local governments
To read Werner Consulting’s analysis, click here.
To read more about AALC’s legislative priorities, click here. Insert 2024 Priorities.
Key Deadlines:
Jan. 19--Bill Drafting Requests
Feb. 9---Introduction of Bills in First Chamber
Feb. 21--Governor’s Combined Budget and State of the State Address
Mar. 15--Senate Bills out of Senate Committee
Apr. 5---House Bills out of House Committee
Apr. 12--Senate Bills 3rd Reading
Apr. 19--House Bills 3rd Reading
May 3---Bills out of Committee in Second Chamber
May 17--Bills out of Second Chamber 3rd Reading
May 24--Adjournment
|