By JOHN O'CONNOR | AP Political Writer
SPRINGFIELD, Ill. (AP) — Illinois Gov. J.B. Pritzker, facing a costly reelection campaign, plans to tackle another foe — inflation approaching 7% — in a state budget proposal that would lift or freeze taxes on groceries and gasoline and give homeowners a one-year rebate of up to $300, an aide told The Associated Press.
The Democratic governor's plan, set to be unveiled Wednesday during his combined State of the State and budget address, would spare consumers nearly $1 billion in taxes during the coming year, Deputy Gov. Andy Manar said in an interview. The state will compensate local governments for any revenue lost through the tax cuts, Manar said.
“We have a growing economy. We have growing revenues,” Manar said. “At the same time nationally, the governor understands that the surge in inflation is taking a bite out of people’s pocketbooks. And it’s hitting working families hard in Illinois.”
Pritzker is facing what is expected to be an extremely expensive campaign for a second term. His budget announcement comes just a week after Aurora Mayor Richard Irvin expanded the field of would-be Republican challengers to five. Irvin heads a GOP slate which is expected to have up to $300 million in backing from hedge fund CEO Ken Griffin.
The governor's address Wednesday will be in person for the first time since the COVID-19 pandemic hit, but lawmakers are still encouraged to watch on video elsewhere to limit contact on the House floor during the latest coronavirus surge.[1:1]
Pritzker's proposal, which he has labeled the Illinois Family Relief Plan, recognizes that the state's economy has rebounded from the COVID-19 pandemic far more rapidly than expected, according to Manar. It relies on Pritzker's contention that he has spent his first three years in office balancing the budget and paying down bills.
If the Legislature controlled by Democrats approves, the budget that takes effect July 1 would:
— Suspend for one year the 1% sales tax on groceries. That would save consumers $360 million, Manar said. The money collected is distributed to local municipalities, but the state would replace that funding.
— Freeze the motor fuel tax on gasoline for a year at 39.2 cents per gallon. To fund Pritzker's $45 billion statewide construction plan in 2019, the tax was doubled to 38 cents and indexed to inflation annually. Without a freeze, it would increase 6.9% to 41.4 cents July 1, Manar said.
That would be a $135 million revenue drop. But Manar said the dip would not affect state construction in the coming fiscal year, and the newly minted federal infrastructure plan will funnel additional money to Illinois.
— Provide a property tax rebate up to $300. Every property owner can get an income tax credit of up to 5% of property taxes paid. For single filers earning less than $250,000, the state would double that 5% credit in the form of a rebate. This would cost the state an estimated $475 million.
Economic forecasts bolster Pritzker's claim of affordability. The Governor's Office of Management and Budget reported in November that revenues were up in the current fiscal year by $1.7 billion, which, when offset by additional spending, still left the state hundreds of millions of dollars ahead halfway through the year. The Legislature's financial forecaster has not updated its numbers recently, but its revenue adjustments have been similarly rosy.
Republicans, who have said Pritzker spends too much and lacks financial discipline, will have a hard time knocking the idea of putting money back into consumers’ pockets. But there is room for criticism. Last spring, Pritzker said a main budget goal was reducing the so-called structural deficit — a fundamental imbalance in the state's revenues versus expenditures, as opposed to a deficit caused by an unexpected downturn or other temporary factors.
Manar said it's possible to tackle rising inflation while “preserving the path” Pritzker has built toward stability.
“Those two things can be accomplished at the same time,” Manar said. "The governor believes that they can.”
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Notes & References
Rugaber, Christopher. “A Key Inflation Gauge Rose 5.8% in 2021, Most in 39 Years.” AP NEWS. Associated Press, January 28, 2022. https://apnews.com/article/joe-biden-business-consumer-spending-prices-inflation-803bac5da091d3b7ad1b19a1dc36991a. ↩︎ ↩︎
“Motor Fuel Tax Rates and Fees.” Illinois.gov. Accessed January 31, 2022. https://www2.illinois.gov/rev/research/taxrates/Pages/motorfuel.aspx. ↩︎
Colleen Long, Steve Peoples. “Biden Visits Collapsed Bridge, Touts Infrastructure Law.” AP NEWS. Associated Press, January 29, 2022. https://apnews.com/article/joe-biden-business-pittsburgh-pennsylvania-elections-b9f06105712885d268f19965e4a2f8fb. ↩︎
“Property Tax Credit.” Illinois.gov. Accessed January 31, 2022. https://www2.illinois.gov/rev/individuals/credits/Pages/propertytaxcredit.aspx. ↩︎