SPRINGFIELD, Ill. (AP) — Illinois Gov. J.B. Pritzker plans to use his annual budget address Wednesday to offer consumers relief from soaring inflation by lifting or rebating some of the biggest pains in the pocketbook — taxes paid in the grocery checkout line, at the gas pump and to the property tax collector.
The Democratic governor’s plan, set to be unveiled 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.
Pritzker will deliver his speech, but he won’t address a joint session of the General Assembly, which is customary. House and Senate leaders on Monday night canceled lawmakers’ three scheduled session days this week because of a winter storm approaching central Illinois, which the National Weather Service predicts will make travel hazardous.
Manar said Pritzker’s plan was developed from the premise that the economy is rebounding from the COVID-19 pandemic much more rapidly than anticipated, and that the administration has balanced budgets and paid down debt in his first three years.
“At the same time nationally, the governor understands that the surge in inflation is taking a bite out of people’s pocketbooks,” he said. “And it’s hitting working families hard in Illinois.”
Pritzker is facing what’s expected to be an extremely expensive campaign for a second term. Billionaire hedge-fund chief Ken Griffin has pledged up to $300 million to defeat the first-term governor. His expected beneficiary, Republican hopeful Richard Irvin, Aurora’s mayor, on Monday decried Pritzker’s plan as “election-year gimmicks.”
Democrats holding supermajorities in both legislative chambers should be receptive to the proposal, called the “Illinois Family Relief Plan,” which would:
—Suspend for one year the 1% sales tax on groceries. That would save consumers $360 million, Manar said. Local municipalities get that money, but the state would replace it.
According to the Center on Budget and Policy Priorities, only 13 states impose sales tax on groceries, considered highly regressive because low-income consumers pay far larger amounts of their income on stocking the pantry. But after Arkansas’ 0.125%, Illinois has the nation’s lowest. Mississippi tops out at 7%.
And Illinois has scaled back significantly. Sales tax on food and drugs were 4% until January 1980, dropped to 3% that year and to 2% in 1981. When the current state-local tax of 6.25% took effect in 1990, sales tax on food dropped to 1%.
—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.
There are few expenses that irk consumers more than fuel — with good reason. According to IGEN, a Green Bay, Wisconsin-based company that helps regulated industries with tax and data issues, Illinois owns the nation’s sixth-highest motor fuel tax on gasoline, following Pennsylvania, at 58.6 cents per gallon, California, Washington, New Jersey and New York. Illinois’ 46.6 cents on diesel fuel tops New York for fifth place in that category.
The $135 million lost would not affect state construction in the coming fiscal year, and the newly minted federal infrastructure plan will funnel additional money to Illinois, Manar said.
—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. Single filers earning less than $250,000 could see that credit doubled in the form of a state rebate.
This would cost the state, which has one of the nation’s highest property tax rates, 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, less unanticipated spending, still leaves the state hundreds of millions of dollars ahead. The Legislature’s bipartisan financial forecaster has less recent, but similarly rosy numbers.
But it puts off dealing with billions of dollars of debt still facing Illinois. It was a major reason Pritzker pushed a constitutional amendment in 2020 to raise income taxes on the wealthiest residents, which GOP challengers will likely use to taint the incumbent.