Pritzker’s ‘Family Relief Plan’ offers Illinoisans $35 while inflation takes $90
Gov. J.B. Pritzker boasted about financial responsibility and sympathy towards working families, but the average family of three can expect to save only $35.52 per month as inflation eats away $90 from that family’s budget.
Illinois Gov. J.B. Pritzker is boasting about what his Illinois Family Relief Plan means, but a little math shows it means $35.52 a month in savings for the average family at the same time inflation is eating $90 from their budget.
Pritzker’s relief plan started July 1. It suspended the state grocery sales tax until July 2023, delayed the July gas tax hike until January, offered property tax rebates for middle- and low-income families as well as minor, temporary income tax credits.
With a declining state population of 12.67 million, the average Illinois family of three can count on saving roughly $35.52 per month, based on Pritzker’s projection of $1.8 billion in tax relief over about a year. A monthly check of that amount would be quickly eaten by rising state inflation, which took an additional $90 from Illinois households in June and is trending upward.
Pritzker called the package a “new and creative way” to deliver relief. He also boasted about his administration’s fiscal record: “We are doing that because Democrats balanced the budget, eliminated the bill backlog, and the state government is now running a surplus,” he said.
While Illinois families are seeing their incomes eroded by inflation, state government enjoyed record-high tax revenues topping $57 billion in 2021, according to data from the St. Louis Fed. Under the generous assumption that tax revenue remains constant in 2022, $1.8 billion is chump change, representing a mere 3.16% rebate. No surprise, because the package offers little refuge from the crippling tax burden faced by Illinoisans.
Pritzker suspends 1% grocery tax, but 6.25% rate on general merchandise remains
Pritzker’s administration estimated $400 million of savings would come from freezing the state’s 1% grocery sales tax until July 2023. What Pritzker failed to mention was Illinois is one of 13 states to even have a grocery sales tax. Suspending it means Illinois, for a year, joins 37 other states that see it as wrong to tax people’s need to eat.
Worse, the effects will barely be felt. The average Illinois family of three spending $5,642 annually on groceries can count on saving $4.70 per month, which buys little more than an extra gallon of milk. A more impactful move would have been permanently eliminating the grocery sales tax. Cutting back on the 6.25% sales rate on general merchandise would be warranted, because Illinoisans already face the eighth-highest combined sales tax burden in the nation.
Gas tax hike freeze: delaying the pain
Illinoisans also should not count on the plan’s freeze on gas tax hikes to lessen woes at the pump. Although Pritzker’s campaign claimed to have frozen the entire tax, this policy only delays the automatic increase from July to next January. This means residents will continue paying the same sky-high prices, only to be hit with double hikes in 2023.
The state’s gas woes are partly thanks to Pritzker having doubled the motor fuel tax in 2019, causing Illinois’ gas taxes to rise to the second-highest in the nation. Consequently, the state will have taken in over $3.5 billion extra dollars at the pump by the time Pritzker’s first term ends. Rather than superficial re-election gimmicks, Pritzker should consider suspending the gas tax entirely until inflation has subsided.
Property tax rebate ineffective in stifling nation’s second-highest rates
In 2021, Illinois ranked second in residential property tax rates for the fourth consecutive year, hitting residents with a bill worth 2.27% of their home value. Unfortunately, the Family Relief Plan will hardly dent that rate.While eligible homeowners may receive up to $300 in refunds from their property taxes, a 50-state property tax analysis shows Illinois needs much more than $300 to catch up.
For example, the average $217,500 house in Illinois pays between $915 to over $3,000 more in property tax than equally valued houses in neighboring states. This means, at best, an Illinoisan owning a $217,500 home can earn $300 back from their bills. But, living next door in Indiana would have saved them over 10 times their rebate at $3,089.
Even if every homeowner receives the full benefit of the plan, Illinoisans would still pay the fourth-most expensive property taxes in the nation. They would barely beat out New Hampshire and Connecticut by less than $100 each.
However, the $300 fails to offset the hike in property taxes Pritzker’s administration oversaw. Over his first term, the average Illinois household paid $1,913 more in property tax.
If Pritzker seriously wanted to create a more friendly environment for homeowners in Illinois, he and lawmakers would pass constitutional pension reform so state and local governments can sustainably pay down pension debt. By doing so, property taxes in Illinois can return to the more bearable rates seen in the 1990s.
Lt. Gov. Juliana Stratton commented Illinoisans “deserve to know that they are not on their own,” asserting the state works to “ease the burden” of its residents. But the Family Relief Plan hardly eases anyone’s burden. For every $1 saved, the average family can expect to pay almost $5 in additional taxes imposed during Pritzker’s tenure. Thanks to these increases, the average family is short-changed $2,165.
Permanently repealing the grocery sales tax and annual gas tax hikes, cutting back on the general sales tax, and passing constitutional pension reform would provide a real family relief plan.