Making the numbers work
Give Gov. J.B. Pritzker some credit; the man can give a good speech.
Last week’s budget address was well-written and respectful of its audience and effectively used Illinois history to make its points. Unlike some previous occupants of that office, Pritzker didn’t try to make himself look better at the General Assembly’s expense. He didn’t propose totally outrageous revenue or spending ideas that had zero chance of passage.
But what matters most about a budget address is what’s actually in the budget. And it seemed to me like the governor may have oversold the doom and gloom during the past couple of weeks by warning of a $3.2 billion deficit. Pritzker did utter the word “austere,” but focused mainly on how he planned to spend hundreds of millions of dollars on programs near to his heart.
The coming year’s pension “holiday” is bigger than initially advertised – $878 million versus the $800 million figure previously floated by the governor’s office. And they’re looking at $390 million for an “assessment” on managed care organizations for Medicaid programs.
Pritzker wants to reduce interfund borrowing repayments by $315 million, incentivize the payment of delinquent taxes for an estimated $175 million, decouple from the federal repatriation tax cut to bring in $94 million, slap a progressive tax structure on video gaming to bring in $89 million and cap the amount retailers can keep from collecting the sales tax to $1,000 a month to bring in another $75 million.
Licensing fees for sports wagering and recreational cannabis would bring in $212 million and $170 million, respectively. He didn’t book any usage tax revenues.
There were some surprises. We knew Pritzker would ask to impose an e-cigarette tax to bring in $10 million, but we didn’t know he wanted to increase the cigarette tax by 30 cents a pack to bring in $55 million.
Revenues from both taxes will be used for Medicaid spending.
We also hadn’t heard about a potentially controversial plastic bag tax that will supposedly bring in $20 million. Between the minimum wage hike, the retailer sales tax discount cap and the plastic bag and two cigarette-related taxes, Pritzker may make it even more difficult for the Illinois Retail Merchants Association to justify working with him after being the only business organization not to endorse Bruce Rauner last year.
The governor’s revenue projections for both this fiscal year and next are a combined $1.4 billion higher than the previous administration’s admittedly gloomy forecast, but that includes the $1.1 billion in additional revenues from his tax and fee list.
Pritzker’s projected expenditures for this fiscal year and next are a combined $660 million lower than Rauner’s and that’s mainly because of the pension payment “holiday.”
You have to look hard to find proposed program cuts, but they do exist. However, the expansions vastly outweigh the cuts. Most have already been widely reported, but the highest percentage increase is for the governor’s own office, at 155 percent. The state has a new law that for the first time requires all employees of the governor’s office to be paid out of his office’s budget, not offshored to other state agencies. For decades, governors have used offshoring to mask the actual costs of operating their offices by putting their staff on other agencies’ payrolls. So, while eye-popping, it’s reasonable.
And while universities are receiving a 5 percent increase in operating assistance, the total appropriation is still just 96.4 percent of what they were appropriated in the Fiscal Year 2015 budget - the last one approved before the two-year impasse began. That’s perhaps the best illustration in the entire budget about how far the state has to go to repair the damage caused during Gov. Rauner’s tenure – not to even mention the damage from the previous 15 years.