Gov. J.B. Pritzker proposed a $40.7 billion state budget Wednesday — virtually flat from the current plan — but dressed it up by dangling the prospect of a $1.4 billion revenue boost if voters approve a radical income-tax overhaul this fall.
The second-year Democrat presented a fiscal outline that purports to boost spending in key areas. For example, he proposed a $350 million annual increase in K-12 education promised by a 2017 funding change. But Pritzker is holding $150 million of that “in reserve,” to be used next year if the state constitution is rewritten to uphold a graduated tax on larger incomes, which would produce $1.4 billion more in revenue in the second half of the fiscal year that begins July 1.
“Because this reserve is so large, it inevitably cuts into some of the things that we all hold most dear: increased funding for K-12 education, universities and community colleges, public safety and other key investments,” Pritzker said in speech to a joint session of the General Assembly. “But as important as these investments are, we cannot responsibly spend for these priorities until we know with certainty what the state’s revenue picture will be.”
With the additional tax revenue, the Pritzker administration plans on a $42.1 billion blueprint, a 3.8% increase over the current year.
Other spending items on the “reserve” list are 5% increases for both university and community college spending totaling $70 million, $40 million extra for school programs such as special education and transportation, Medicaid provider rate increases, an entire class of state police cadets, and money to stave off a state government hiring freeze that could take effect on Dec. 1 if the constitutional amendment goes down at the ballot box.
It's a list a successful campaigner such as Pritzker can use to boost the amendment's chances of success, telling taxpayers that important programs can be restored if they approve the tax change. Deputy Gov. Dan Hynes said earlier Wednesday that the list is not a Sword of Damocles, but a factual presentation of a budget that takes into account fiscal uncertainties.
The graduated income tax was the centerpiece of Pritzker's 2018 campaign. He promises that those making up to $250,000 a year would pay the same 4.95% rate they currently do or less. Those over that threshold would pay increasingly higher rates, topping out at 7.9%, and those rates would produce the additional revenue.
One spending boost not tied to that extra revenue is $147 million more for the Department of Children and Family Services after a particularly troubling year. An inspector general's report released in January indicated that 123 children who died last year had been in contact with the Department of Children and Family Services.
Pritzker's plan would increase the number of agency employees to 3,056, up from 2,758 in 2018. One goal is to reduce the workload of caseworkers who monitor families that have had contact with the department — for example, where there's suspected child abuse or neglect. Other employees would be assigned to the agency's hotline, which receives calls about suspected abuse.
The agency's $1.46 billion budget for the fiscal year that begins July 1 would represent an 11% increase from the current year.
Republicans are calling for spending restraint. To get ahead of them, Pritzker told reporters last week that “government efficiencies” that his administration found in his first year in office would cut spending in the coming budget by $225 million and by at least $750 million during the next three years.
The bulk of that, he said, comes from new agreements with public employee unions that reduced health care costs, saving the state $175 million next year and up to $650 million through fiscal 2023.
Republicans said it doesn't go far enough in cutting spending. Rep. Tom Demmer of Dixon noted that Pritzker in the fall asked his cabinet to outline ways to cut 6 1/2% from the budgets they submitted to him.
“Only a small portion of it was actually from reduction in operating budgets,” Demmer, the House Republicans' budget negotiator, said Tuesday. “That's a far cry from the 6 1/2% agency directors were asked to identify.”