Gov. Pritzker’s Tax, Borrow & Spend Budget More of the Same Failed Democratic Playbook. Governor J.B. Pritzker delivered his first Budget and State of the State Address to a joint session of the Illinois General Assembly in Springfield on Wednesday, February 20th.
The Governor’s introduced Fiscal Year 2020 budget proposal estimates general funds revenue at $38.9 billion and proposes $38.7 billion in general funds spending. To help close a $3.2 billion budget deficit, the Governor is proposing pension savings through a ramp extension, new revenues through taxes on new and existing services, and closing so-called “corporate loopholes.” Altogether, the Pritzker Administration estimates a $1.5 billion increase in revenue over FY19.
House Republicans had hoped that Governor Pritzker would deliver an austere budget that cuts spending and forces the State to live within its means. Unfortunately, the Governor called for more taxes, more spending and more borrowing. This is just more of the same from the failed Democratic playbook that has resulted in record debt and has driven families and jobs out of Illinois.
As expected, Governor Pritzker called for the passage of a progressive income tax to fund state government and help pay down Illinois’ massive unfunded pension liabilities. The Governor did not provide details on what the tax rates and tax brackets would look like, leading many to believe that this tax hike will hurt middle-class families, who were hit with a 32% income tax hike just two years ago.
In addition to his call for a progressive income tax, the Governor’s budget proposal includes new revenues from a tax on e-cigarettes and plastic bags, higher cigarette taxes, the legalization of sports betting, and the selling of licenses for legalized marijuana.
Governor Pritzker also introduced a five-point plan to address the State’s $130 billion in unfunded pension liabilities. The Pritzker pension plan includes more borrowing, pseudo-pension holidays, and the sale of State assets to offset liabilities. It would smooth and flatten payments into the pension systems, adding seven years to the pension system amortization schedule, which would extend the 90% funding ramp to 2052.
The Governor’s proposal fails our pension systems, offers no substantive reforms to strengthen them or relieve the long-term budgetary stress on the state budget. Reducing Illinois’ annual pension contribution by $878 million through the ramp extension just kicks the can further down the road. In fact, these are the same pension gimmicks that Gov. Blagojevich relied on for his phony budgets for years.
Governor Pritzker’s proposed budget fails Illinois families. It offers no property tax relief. It does nothing to help Illinois businesses create and retain jobs. It will not help us dig out of the fiscal hole created by decades of failed Democratic rule. We can and must do better.
ECONOMY
Moody’s sees bright future for some Illinois sectors. The Moody’s Analytics report looks at the future of Illinois, with an eye towards job creation and the future economic prospects of the state. Moody’s finds grounds for optimism in the booming real estate market in downtown Chicago, and new surges of job creation in some sectors of Illinois manufacturing. Illinois industrial job growth centers on plants located along Interstate highways in Downstate Illinois.
However, the report also finds that a growing shortage of workers trained in specific skills sets could nip this potential boom. Illinois’ unemployment rate has declined to 4.3%, with almost all of the people in our state’s labor force already working and collecting paychecks. Although the employer sector created 70,000 new nonfarm payroll jobs over the most recently-concluded 12-month period, few unemployed workers remain to fill these newly-created job positions. The population of Illinois continues to decline. In addition, many of the new jobs being created, such as jobs in specialty professional services in downtown Chicago and positions for certified shop-floor workers in “smart,” robotically-equipped Downstate production workplaces, are being created in geographic locations that do not have qualified workers available in the areas where the jobs are being offered by employers.
GAMBLING
Temporary moratorium on payouts for winning scratch-off lottery tickets. The Illinois State Lottery reports that the moratorium is temporary and is being caused by their transition to a new central gaming system and digital lottery platform. Retailers who sell scratch-off tickets will have to ask the holders of winning tickets to keep them safe and bring them back after the upgrade is completed. After the upgrade is completed, the Lottery and its retailer partners will be able to validate winning tickets and make payouts to winners. The Lottery payoff moratorium applies only to instant (scratch-off) games. The moratorium was announced on Wednesday, February 20.
Investigative report reveals that some video poker “chain shops” target chronic gamblers. The WBEX/ProPublica report looks at the 30,000 video poker machines that have sprouted up throughout many regions of Illinois during the 6.5 years of legal Illinois video gambling. The machines are programmed to give players an exciting play experience. At the same time, the machines have computer chips that are programmed to ensure that the machine makes money and most players lose money. The report found that Prairie State gamblers have lost more than $5 billion during this multi-year period.
The machines’ owners, the terminal operators, have placed 30,000 video gaming machines in 6,800 licensed locations throughout Illinois. Both terminal operators and gaming locations are licensed by the Illinois Gaming Board (IGB). The Board’s budget does not include funds for tracking the number of problem gamblers. The WBEX/ProPublica report estimates that about 217,000 Illinois residents are problem gamblers. The report also details how the Illinois video gaming industry reaches out to people who are tempted by problem gambling. Machines have been placed in a wide variety of regions, including street-corner betting shops throughout Illinois. There are now more licensed machine locations to place a bet here in Illinois than in gambling-friendly Nevada.
NATURAL RESOURCES
Report shows Chronic Wasting Disease (CWD) spreading among Illinois deer. The incurable disease causes a deer’s brain and nerves to break down, dooming the animal. CWD has now been reported in animals, including deer, that live in 23 of the 50 U.S. states. In Illinois, CWD has been reported in 17 of our state’s 102 counties. Disease reports show that infected animals are spreading southward from the Wisconsin border and now live as far south as Livingston County in north-central Illinois.
CWD can be found in several types of free-ranging woodland animals, including deer, elk, and moose. Although there are no known cases of CWD spreading to humans, the disease is 100% fatal and there is no treatment for it. The Centers for Disease Control and Prevention (CDC) says hunters should have their venison tested for CWD before eating it. The Illinois CWD report was released on Tuesday, February 19.
SUBURBS
Sterigenics plant shuts down amidst intensified scrutiny. Following renewed reports of toxic emissions, the Illinois Environmental Protection Authority (IEPA) took steps this week to shut down a controversial sterilization plant in Willowbrook. The southwest Chicago suburb, adjacent to Interstate 55, has been rocked by reports of ethylene oxide, a toxic chemical, being released by the plant.
Samples of air from the immediate neighborhood of the controversial plant have shown small, but detectable, quantities of the chemical in the air. Ethylene oxide is completely banned from release into the atmosphere. The IEPA has issued a Seal Order to shut down sterilization cycles at the factory that uses the toxic substance. The order was announced on Friday, February 15.
House Republican Leader Jim Durkin released the following statement on the announcement of the Seal Order to the Sterigenics facility:
“Today’s Seal Order to the Sterigenics facility in Willowbrook is welcome news. I appreciate the efforts of everyone who has worked together over the past year to finally bring safety and peace of mind back to our community. Sterigenics has failed our residents, and today’s action should put any other entity that threatens the health and safety of residents in Illinois on notice.”
WEEK IN REVIEW
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