AP NEWS

Lawmakers at odds over surprise $1.5 billion surplus

May 12, 2019

Illinois collected $1.5 billion more than expected last month, a windfall that could wipe out most of the state’s budget shortfall and help avoid a proposed pension holiday, but lawmakers disagree on what to do with the surplus.

Illinois House Republicans want Gov. J.B. Pritzker and Democrats to end calls for increasing taxes now or in the future. The state’s comptroller urged caution.

State government collected 38 percent more from taxpayers in April than it did a year ago, House Majority Leader Greg Harris wrote in a letter to lawmakers.

The revenue is $1.5 billion more than projected for the month, Harris said. That boost will help address most of the budget shortfall and Harris said the governor wants to use the surplus to pay pensions at statutorily required levels instead of moving ahead with a proposed pension holiday that was widely criticized.

House Minority Leader Jim Durkin, R-Western Springs, said the unexpected revenue means there’s no need for more taxes.

“There’s no need to talk about raising taxes on bags, cigarettes, businesses or the middle class,” Durkin said. “And there’s certainly no reason to be even considering a graduated tax now.”

Gov. J.B. Pritzker had proposed more than $1 billion in new revenue in his budget address, which included a statewide plastic bag tax, taxing insurance plans, increasing tobacco taxes, increasing e-cigarette taxes, increasing video gaming taxes, and more, including increased revenue from licensing for sports betting and recreational cannabis.

The governor also had proposed lowering how much the state would pay into its underfunded pension systems as a way to shore up the budget while working to change the state’s flat income tax to a structure that has higher rates for higher earners. Pritzker’s administration estimated the governor’s graduated tax plan would bring in $3.4 billion while lowering income tax rates for most taxpayers.

Comptroller Susana Mendoza said April’s unexpected revenue doesn’t solve the state’s financial problems.

“We still owe $6.5 billion to businesses across the state of Illinois,” Mendoza said. “That bill backlog is not being accounted for in the budgets that are being considered.”

Some of those outstanding bills come with interest rates of up to 12 percent per year.

Mendoza said the surplus resulted from a number of things.

“Part of it, of course, will be because quite a few Illinoisans withheld less from their paychecks than they should have, so that’s one of the potential reasons why, also the [stock] market has been performing incredibly well,” Mendoza said.

Mendoza warned that things could change if the market slumps.

Durkin said Illinois is feeling the growth in the national economy, but the state could be reaping additional benefits.

“We’re benefiting from things that have happened in Washington [D.C.],” Durkin said. “But we have said over and over again, there’s more we need to do to be able to help growth in Illinois and those are pro-business types of reforms.”