Illinois governor directs state agencies to prepare for $800 million less than proposed budget

(The Center Square) – Illinois state agencies are being directed to prepare to receive $800 million less than what Gov. J.B. Pritzker proposed for the fiscal year 2025 budget.

The General Assembly has until May 31 to pass a budget with simple majorities. Fiscal 2025 begins July 1. Pritzker proposed a $52.7 billion budget in February that included about $1 billion in tax increases.

In a memo obtained by The Center Square sent out to state agency directors Wednesday, Deputy Gov. Andy Manar said it has “become clear that opposition to proposed revenue is significant enough to direct agencies to prepare for the possibility of reductions to proposed spending” and “we must prepare to implement a potential balanced budget scenario with $800 million less in available revenue.”

Pritzker administration memo to state agencies

Among Pritzker’s proposed tax increases for the coming fiscal year is a doubling of the state’s tax on sports betting companies. That’s estimated to increase taxes by about $200 million. A cap on the sales tax retailers’ discount is expected to increase taxes by $101 million. An adjustment to the individual income tax standard deduction is estimated to increase taxes by $93 million.

The most expensive tax hike is a proposed increase in the cap on the net operating loss deduction for businesses estimated to raise about $526 million.

Industries impacted by the various tax increases have been steadfast in opposition.

“While we do not know which specific programs would be impacted should the General Assembly choose to not pass the revenue package, we think it is prudent to prepare for the possibility,” Manar’s memo said. “As you prepare, keep in mind that the end of access to federal ARPA funds make it impossible to sustain many programs without additional revenue. In addition, please consider that much state spending is tied to entitlement programs or spending related to consent decree compliance.”

In other revenue projections, the Governor’s Office of Management and Budget’s April 2024 report to the Legislative Budget Oversight Commission shows corporate income tax flat from February, individual income tax down $170 million in that same time and sales taxes down $15 million since February. Combining other tax revenues for that time, total state revenues are down $53 million in the most recent report.

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