Pot, pensions and plastic bags: how Pritzker plans to balance state budget

Capitol News

SPRINGFIELD, Ill. (WCIA) — In a soaring thirty-seven minute speech, Governor J.B. Pritzker laid out his preferences for the state’s fiscal future, touching on everything from pensions to plastic bags.

The governor’s first budget address was scattered with some specific spending proposals, included familiar rhetoric from his campaign stump speeches, and drew inspiration from former Illinois Governor Henry Horner who navigated the state through the Great Depression era.

“I know the road ahead is hard, but I think it’s about time we all walk it together,” Pritzker said, summoning the inspirational tones of Horner’s optimism amid dark financial days.

Pritzker’s biggest promise — and tallest order — relies on the General Assembly and Illinois voters to approve a change to the state’s constitution to allow for a graduated income tax.

“A fair tax will change the arc of Illinois’ finances forever,” Pritzker proclaimed, while acknowledging that potential solution cannot provide any relief in this upcoming Fiscal Year 2020 budget. The question could appear on a ballot in November 2020. If 60 percent of Illinois voters approve of the measure, the added revenue would likely not be available for a full fiscal year spending plan until 2022. 

“Until then, this proposed budget serves as a bridge to a stable fiscal future,” Pritzker promised, shifting his gaze to the Land of Lincoln’s more immediate troubles.

By his own accounting, the state stands a long way from firm fiscal footing. 

“Illinois is faced with a $3.2 billion budget deficit and a $15 billion debt from unpaid bills,” he said, later blaming his predecessor’s rigid negotiating posture for the increasing debt load.

“During a time of unprecedented economic growth across the country, we lost four valuable years because of an ideological battle,” the Democrat said, referencing former Republican Governor Bruce Rauner’s clash with House Speaker Michael Madigan.

Using a combination of new taxes on plastic bags, marijuana, sports gambling, and health insurance companies, Pritzker’s budget officials project the state can collect $1.12 billion in new revenue for the state’s coffers.

Their plan would also increase the cigarette tax from $1.98 per pack up to $2.30 per pack, and expand it to e-cigarettes and vaping products.

Critics suspect Pritzker’s administration grossly overstimated $170 million in new marijuana revenues for this upcoming fiscal year. In order to capture that prize in time, the General Assembly needs to approve the plan before a May 31st deadline, then the Joint Committee on Administrative Rules would have to implement the licensing procedures before any licensing fees could be collected. Lawmakers familiar with the process estimate it could take four to six months, likely delaying those revenues until after the upcoming fiscal year is over. Without the $170 million revenue, the Pritzker budget plan, which projects a surplus of $155 million, would already be in the red. 

According to Deputy Governor Dan Hynes, who spoke to reporters in a closed briefing on background, the administration believes it can rush the marijuana rules making process through fast enough so it can be ready to accept applications and collect licensing fees before the end of the fiscal year.

Pritzker’s communications chief Emily Bittner specifically prohibited reporters from quoting administration officials on the record in order to give Pritzker “the opportunity to communicate his budget priorities himself, in his own voice,” although it is not clear whether or not Pritzker feared his own highly paid appointees would somehow overshadow his first budget speech. Pritzker was not made available to answer questions about his proposal in his own voice.

The state also could spend an estimated total of $38.7 billion dollars if Pritzker can lobby enough legislative support for his spending plan, although that figure relies heavily on extending the scheduled ramp to make pension payments, a controversial proposal former Governor Rod Blagojevich enacted. 

“This just moves things around, kicks the can down the road, skips pension payments, doesn’t make any fundamental changes on the cost side,” said Representative David McSweeney (R-Barrington Hills). McSweeney, a fiscal hawk who was consistenty critical of Governor Rauner, said he would “lead the charge” to block Pritzker’s constitutional amendment for a progressive income tax, and called for a change to the state’s guiding document to allow for structural pension reforms.

Pritzker predicted McSweeney’s response in his budget address. 

“Some will criticize this approach,” the governor said. “There are those who will say that retirees should lose the benefits they earned. The Supreme Court has made it clear that that is illegal.”

The Supreme Court only interprets the state constitution, and would be obligated to honor any changes to it. Whether his calculus is political or actuarial, Pritzker has only expressed interest in changing the state’s constitution in one direction. 

“Ultimately, the fair tax must be part of the long term solution to our pensions,” Pritzker said, suggesting he would “attack our pension liability from many angles all at once.”

However, Pritzker’s immediate pension plan is a stark reversal from his prescription on the campaign trail.

“There is really only one good way to do it and that is to step up payments,” then-candidate Pritzker told Crain’s Chicago Business Magazine’s editorial board during an interview one year ago.

Now that he’s in office, Pritzker is proposing selling off state assets such as Chicago’s James R. Thompson Center, borrowing $2 billion on the bond market, shorting scheduled pension payments by $800 million, and promising voters he will alter the equation in the future if they grant him a progressive income tax. 

“It is not really solving the problem today,” said Representative Rob Martwick, a Chicago Democrat who chairs the House Personnel and Pensions Committee,”but it’s part of an aggressive proposal that looks for future reforms and pursues them.”

“You can’t put extra money into the pensions until you raise that revenue,” Martick added. 

Pritzker’s new budget calls for $150 million in extra spending on early childhood education, a total increase of $375 million on public schools, includes a five percent boost to higher education at a total increase of $52.2 million, and adds another $50 million to the Monetary Award Program (MAP) grants to help students in poverty afford college tuition.

Plus, the administration’s plan spends hundreds of millions more on human services for children in poverty, seniors, community programs for addiction services, and the homeless. 

State police get a $7.6 million boost for new cadet classes, an extra $5 million to pay for the state’s new Gun Dealer Licensing Act, and the Department of Corrections is in line for an added $25 million in funding to implement a new electronic medical record system to better track the healthcare of the state’s prison inmates. 

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