State budget facing $700M cut for 2021

Pritzker first warned of spending cuts last month after the graduated income tax plan failed at the polls, warning the cuts “will be painful.”
Illinois Gov. JB Pritzker
Illinois Gov. JB Pritzker
Published: Dec. 15, 2020 at 4:12 PM CST
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SPRINGFIELD, Ill. (WIFR) - Facing a nearly $4 billion budget shortfall for the rest of the current fiscal year – due to revenue lost as a result of the pandemic, and the failure of his signature graduated income tax plan – Gov. Pritzker on Tuesday announced $700 million in spending cuts.

“The pandemic has caused every state in the nation to face tremendous revenue shortfalls, and Illinois is no exception,” Pritzker said Tuesday afternoon.

Pritzker said his $711 million in planned cuts to state agencies under his direct control is just “a first step” toward balancing the budget, and he called on state lawmakers to come to the table with further proposed budget cuts.

The governor in particular called out Republicans who vehemently opposed his proposed graduated income tax hike, which voters rejected in November. His budget plan was counting on $1.4 billion in new revenue from the graduated income tax plan, which would have resulted in the same or lower tax rates for 97% of the state, while increasing taxes on those making more than $250,000.

“Republicans both inside and outside the General Assembly fought tooth and nail against the best solution for our working families, lying about what the Fair Tax would do for our state, pledging their allegiance to the wealthy, and throwing lower and middle class families under the bus,” he said. “Republicans have no plan at all to put the state on a firm fiscal foundation. In the wake of their deafening silence, our challenge remains.”

Pritzker first warned of spending cuts last month after the graduated income tax plan failed at the polls, warning the cuts “will be painful.”

The governor said the pandemic has caused job losses not seen since the Great Depression, and dealt a massive blow to the state’s travel, tourism, restaurant, and hospitality industries,

In Illinois, loss of tax revenue due to the pandemic will cost the state more than $4 billion over the next two fiscal years. Pritzker said, during the current fiscal year that ends June 30, 2021, the state is facing a $3.9 billion shortfall, including $2 billion which is the direct result of revenue shortfalls caused by COVID.

According to the governor’s office, approximately $200 million in cuts will be made at the state’s healthcare and human services agencies; another $71 million will be made at public safety agencies; $135 million in cuts will be made to economic development, environment, and culture agencies; and nearly $305 million in cuts will be made to other government services such as group insurance costs, vehicle and equipment purchases, reduced travel, and an ongoing hiring freeze.

While the governor said cuts are coming to healthcare and human services agencies, he said his administration is committed to making sure there will be no impact on services to protect people from COVID or treat coronavirus patients.

“We’ve tried to be very, very careful with the cuts that we made,” he said.

Pritzker said he is also negotiating with AFSCME, the union representing thousands of state employees, to reduce spending by $75 million through furlough days or other cost adjustments.

“By definition, taking employees of the front line will slow the delivery of services to residents, but this is the place we find ourselves today. It pains me to pursue these actions, because these state employees are public servants who dedicate themselves to improving the lives of the people that we all serve,”

The governor said he is focused on working with state lawmakers to negotiate further budget cuts before considering a possible income tax increase to help balance the budget.

“I put on the table some very significant cuts, I want to make sure the General Assembly comes to the table with their potential cuts, and then we will see where we are during that process,” he said. “Because tax fairness was taken off the table, there will be real human impact here, and while we’ve scoured the budget for ways to cause the least pain, I’m sorry to say that we simply cannot prevent these losses from touching the real lives of our residents. We just can’t.”

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