Illinois lawmakers worked until the early hours of April 9 to pass a $46.5 billion spending plan for the upcoming fiscal year, as well as a $1.8 billion package of mostly-temporary tax cuts that Democrats said are intended to soften the impact of inflation on working families. After passing the budget the legislature adjourned.

Republicans criticized the tax cuts as election year tax cuts as gimmicks designed to help Democratic lawmakers facing tough races.

“Let’s call this budget what it really is — an attempt to buy your vote,” Senate Republican Leader Dan McConchie (R-Hawthorn Woods), said in a statement.

All but a handful of Republicans voted for the measure, but the GOP criticized it for consisting of mostly temporary tax relief.

But State Rep. Mike Zalewski, (D-Riverside), challenged that criticism noting that Republicans also voted for the temporary tax cuts.

“If it was an election year gimmick then it was a bipartisan election year gimmick, because the state GOP legislators all voted for the tax cut bill,” Zalewski said. “So, I just don’t find a lot of sympathy for the notion that this is all gimmicks when the Republicans all voted for my bill on tax cuts.”

As chairman of the House Revenue Committee and the chief House sponsor of the tax-cut bill, Zalewski took some credit for the state’s improving financial condition. Zalewski said that this was the best Illinois budget in a long time. The budget added $1 billion to the state’s depleted rainy day fund.

“I took over as chairman of revenue in 2017 and we were on the brink of insolvency, and now five years later we have the best budget in Illinois in a generation,” Zalewski said. “We’re cutting taxes. I anticipate a credit upgrade and I won’t take full responsibility but I think I played my small role and I’m really proud of it.”

Tax relief plan

Sen. Michael Hastings, (D-Frankfort), hailed the tax relief package as “probably one of the largest savings to taxpayers that we’ve seen in the last decade.”

The package would include $50 checks sent to Illinoisans earning less than $200,000 annually for single filers and $100 checks for those filing jointly and earning less than $400,000. Families would also receive $100 per dependent up to three.

It would also permanently expand the earned income tax credit to 20 percent of the federal credit, up from 18 percent, at a cost of roughly $100 million per year. It would extend EITC eligibility to noncitizens who have an individual taxpayer identification number rather than a Social Security number.

It also calls for doubling the property tax rebate to qualifying homeowners, up to $300 per household, suspending a 2-3 cent motor fuel tax increase for six months, and suspending a 1 percent grocery tax for a year.

The motor fuel tax is the main funding source for road construction projects, so revenues lost from it would be replaced from other state funds.

The budget would also suspend the sales tax on back-to-school items and qualifying clothing items for a 10-day period, Aug. 5-14.

Other details

The Fiscal Year 2023 spending plan also provides for the statutorily required $350 million in additional funding for public schools through the Evidence Based Funding formula that was originally adopted in 2017. Higher education would see increases as well.

The portion of the state’s income tax going to local governments would increase from 6.06 percent to 6.16 percent.

The budget also directed an investment of $235 million in federal American Rescue Plan Act funding to the Reimagine Public Safety Act aimed at early crime intervention.

House majority leader Rep. Greg Harris, (D-Chicago), also praised the budget.

“This is a balanced budget. It’s a responsible budget. I know we’re gonna hear a lot of speeches. I know we’re gonna hear a lot of stunts,” he said. “But for the people of Illinois, Democrats are delivering, Democrats are balancing the budget. Credit rating agencies are noting it, the civic organizations are noting it.”

State revenues came in stronger than expected this year. That was due in part to pandemic-triggered shifts in consumer behaviors that led to more spending on taxable goods than services which are not taxed in the state, increased federal unemployment benefits which are taxed at the state level, and increased tax revenue due to higher-priced consumer goods relating to inflation.

Those and other factors led to higher performance of sales tax and both personal and corporate income tax revenues, according to a presentation last month from the Illinois Department of Revenue.

Rep. Tom Demmer, (R-Dixon), who is running for state treasurer, said the pandemic-related revenue windfalls have allowed Democrats to grow funding faster than year-after-year revenues.

“And when this one-time revenue dries up, the only thing you’ll know how to do is go back and raise taxes yet again,” he said.

Bob Skolnik contributed to this report.