Governor Pritzker Delivers Budget Address
On Wednesday, February 19, 2020, Governor JB Pritzker delivered his SFY2021 Budget Address to a joint session of the Illinois General Assembly. A transcript of the speech is
available via this link.
A Governor's proposed budget establishes the administration's goals and objectives for the next state fiscal year (beginning July 1, 2020). Ultimately, the General Assembly and Governor work together toward a budget agreement that may or may not include projected revenue estimates and spending levels initially proposed by the Governor.
A proposed budget does lay down a marker, however, and the Governor used his remarks to promote the need for action born of optimism. He reminded listeners of the state’s recent history of financial mismanagement and touted his administration’s policy achievements to date. The Governor highlighted the state’s improved credit ratings and attributed a disciplined allocation of the state’s limited financial resources as the reason for the improvement.
The Governor's budget proposal projects General Fund revenues of $42.1 billion and expenditures at $42 billion. The revenue estimate assumes increased state revenue collections following voter approval in November 2020 of a constitutional amendment allowing the state's flat income tax rate to be replaced by a graduated income tax with increased rates on higher incomes.
Of most interest to county officials was the connection made by the Governor between proposed SFY2021 expenditures and pending approval of the constitutional amendment allowing for a graduated income tax.
The Governor indicated that his budget proposal calls for holding a percentage of certain state expenditures in reserve contingent upon approval of higher graduated income tax rates. This would include holding 5% ($73 million) of income tax revenue distributed to counties and municipalities through the Local Government Distributive Fund (LGDF) in reserve while awaiting revenue forecasting certainty.
The Governor also indicated his intent to hold the following SFY2021 appropriations in reserve subject to approval of the graduated income tax:
- Open Space Land Acquisition and Development (OSLAD) grants totaling $29.8 million
- Road Fund revenue totaling $100 million
- Reductions to the Public Transportation Fund and Downstate Public Transportation Fund
If these funding amounts are permanently withheld, counties and other affected local governments would see reductions in state-shared revenues and grant opportunities. With respect to LGDF (shared income tax), the revenue would be held back beginning on July 1, 2o2o. Without voter approval of the increased income tax rates, the state would continue to withhold 5% of LGDF revenue through at least SFY2021 and possibly longer.
Should voters approve the graduated income tax in November, the local income tax share held in reserve would be distributed in a lump sum payment after January 1, 2021. More specifically, the payment would likely be made in the February 2021 LGDF distribution. Distribution of the other funds held in reserve would occur as well.
The Illinois State Association of Counties (ISACo) will engage with the Governor’s Office and General Assembly to preserve and protect state shared revenues that benefit counties and their residents.