• Before receiving federal funds, Illinois Gov. J.B. Pritzker faced a $3.9 billion budget deficit for fiscal year 2021 and a $4.8 billion deficit in fiscal year 2022. Federal funds have both helped cover budget holes and spurred private sector activity, driving upward revisions in revenue. Insider sources say the current budget deficit is $1.3 billion. Illinois’ 2022 pension payment is $11.6 billion.
• Pritzker has already passed 20 tax and fee hikes during his first term, and in his budget address proposed nine more tax increases worth nearly $1 billion. Branded as “closing corporate tax loopholes,” many raise taxes on businesses and eliminate existing credits and deductions. For example, one would reimpose the state’s “corporate franchise tax” and another would hurt Illinois farmers with a new gas tax hike on diesel.
• Illinois lawmakers are seeking permission to use federal COVID-19 relief for debt service. State and local fiscal recovery funds are authorized for covering revenue losses, mitigating public health and economic harm caused by the pandemic, supporting essential workers, and making investments in infrastructure. Illinois lawmakers want to use a portion for repaying some of the $3.2 billion borrowed from the Federal Reserve. Illinois was the only state to borrow from the Federal Reserve’s pandemic lending program.
• Illinois Policy Institute analysis shows the only path to balance Illinois’ budget long term, while protecting services for the state’s most vulnerable residents, is to couple federal relief with a constitutional amendment for pension reform. A “hold harmless” pension reform plan would save the state roughly $2.4 billion the first year and more than $50 billion through 2045, while fully eliminating pension debt.

What to watch with tax credit scholarships:

• Pritzker has proposed reducing the tax credit benefit of the Invest in Kids scholarship program, which helps low- and middle-income families afford private and alternative schooling options. He proposes cutting the deduction from 75% to 40%, projecting it will generate $14 million for general revenue funds.
• Reducing the program will harm the availability of funds for families in need. The average annual household income of current participants is $38,000, and 49% of participating students are Black or Hispanic.
• An alternative proposal, House Bill 4076 would make the Invest in Kids Act permanent. It has 46 co-sponsors and would save the program, set to expire in 2022.

What to watch with ethics reform:

• Many states have some form of recusal or disclosure before lawmakers can vote on issues in which they have a conflict of interest, have statutes or provisions broadly forbidding lawmakers from lobbying the legislature immediately after leaving office, and have restrictions on lawmakers serving as lobbyists while in office. Illinois has not passed any of these basic anti-corruption measures, but a robust ethics package could provide the opportunity.
• Illinois Policy Institute experts recommend a two-year cooling off period for lawmakers leaving office before becoming lobbyists, detailed lawmaker financial disclosures, prohibitions that prevent members of the General Assembly from acting as paid lobbyists while in office, and allowing the legislative inspector general to open investigations about complaints, issue subpoenas and publish summary reports without lawmaker approval.

What to watch with labor: 

• A bill making its way through the General Assembly would allow Chicago Public Schools principals to unionize and strike. The Chicago Teachers Union went on strike three times between 2012 and 2019.
• Illinois is already an outlier when it comes to granting public school employees the right to strike. Strikes are prohibited in eight of the 10 largest school districts in the nation, but Chicago is an exception.
• Illinois Policy Institute experts warn this change could make the CPS environment even more unstable for students.