| Chicago Tribune (TNS)
Governor JB Pritzker is preparing to propose a budget to lawmakers next week that will keep total government spending flat and not propose an increase in the flat rate income tax.
Pritzker will propose closing $ 900 million in unspecified corporate tax loopholes and diverting some earmarked revenue streams like the cigarette tax to the state’s general fund, according to a board of directors’ office.
In the final days of the last General Assembly in January, Pritzker proposed exempting state income taxes from a change to federal tax law that would result in a loss of more than $ 500 million in corporate tax revenue. The legislature rejected his proposal.
The governor’s office is forecasting a deficit of $ 3 billion for the fiscal year beginning July 1, compared to an earlier forecast of $ 5.5 billion, in part due to a stronger-than-expected economy.
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The deficit will also be reduced because the state prematurely repaid $ 700 million of the $ 3.2 billion it borrowed from a special Federal Reserve program, the governor’s office said.
Pritzker’s plan for the coming fiscal year would close the remaining $ 3 billion, according to his office.
The plan, which Pritzker will put out next week, would keep overall spending flat, according to the governor’s office, but would “strengthen” some agencies, including those at the forefront of the state’s response to the coronavirus pandemic, including ministries for public health and health employment security.
For the second consecutive year, Pritzker will propose a spending plan that falls short of funding requirements for the groundbreaking overhaul of education funding by his predecessor, Republican Governor Bruce Rauner, who entered law in 2017, during his tenure in office.
The law requires the state to increase funding for elementary and secondary education by $ 350 million each year. Last year, Pritzker proposed making part of this increase in funds conditional on voter approval for the graduated income tax. The spending plan that Pritzker had finally signed for the fiscal year ending June 30th provided state funding for school housing.
An inflow of federal funding for schools will help make up the difference, and Pritzker remains “committed to ensuring that education is fully funded in the years to come,” his office said.
Pritzker faces high stakes as he prepares to present his third government spending plan to lawmakers.
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His proposed amendment to the state constitution to allow for a tiered income tax was the cornerstone of his plan to address the state’s longstanding tax problems and collapsed when voters resolutely opposed the idea in November.
The governor has taken other long-debated options, including a tax on retirement income, off the table, leaving few options for ensuring long-term stability.
His administration proposed cuts of $ 700 million for the current year, such as hiring and grant freezes. Some parts of this plan, such as leave for government employees, are subject to collective bargaining and have been rejected by the unions.
The government is still hoping that new aid from Congress will help fill the nearly $ 4 billion hole the state is facing this year.