Illinois Senate Democrats Present Mostly Temporary $1.8 Billion Tax Relief Proposal

Sen. Scott Bennett, D-Champaign, addresses a tax relief proposal touted by Senate Democrats Friday at the Illinois Capitol. (Capitol News Illinois photo by Peter Hancock)

Includes direct checks to Illinoisans, expands Pritzker proposal by $800 million

Illinois Capitol News
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SPRINGFIELD — Illinois Senate Democrats on Friday announced a $1.8 billion package of mostly temporary tax relief proposals they hope to include in the fiscal year 2023 budget as the legislative session is entering its final week.

The package is $800 million over and above the tax relief package Governor JB Pritzker proposed in his budget in February, though it includes many of the same tax cuts backed by the governor. The measures are contained in eight amendments to Senate Bill 1150.

The measures include direct checks to Illinoisans, a 10-day tax reprieve on eligible school supplies and apparel, and a six-month tax reprieve on groceries and a fuel tax increase, among others.

Lawmakers are due to adjourn on April 8, with the budget being the main proposal yet to be concluded. It must be approved by both houses of the General Assembly and the Governor.

Pritzker’s office said it would reconsider the plan, while Republicans called it an election-year gimmick.

Sen. Elgie Sims, D-Chicago, a top Senate budget official, said the tax relief was made possible by unspecified “additional revenue” made available in the budget.

“As we went through the budgeting process, additional revenue had been made available,” he said. “And we looked at those revenues. We looked at the governor’s budget that came out in February, there was a billion dollars in tax relief that was in there. So, the tax relief that was planned, we built it, based on the new available income.

Sims only said revenue was “identified from all sources” based on “a recovering economy.”

Last month, the Department of Revenue testified in committee that Illinois took in $4.6 billion more than expected in the current fiscal year ending June 30, largely due to changes related to the pandemic in consumer spending, although Pritzker included this increase in income in its February budget plan. .

IDOR also warned that the ongoing war in Ukraine could impact revenues for the remainder of the current fiscal year and next. And part of the current year’s surplus was dedicated to $1.4 billion in debt reduction in a measure passed last week that also affected debt in the Trust Fund for the unemployment insurance.

The plan announced Friday would include direct checks unique to Illinoisans. Those earning less than $250,000 in 2021 would receive a check for $100, while co-registrants earning less than $500,000 would receive $200. The checks would include an additional $50 per dependent, up to three dependents.

Lawmakers said the hope would be for the checks to be distributed by September, although they said the date was based on immediate taxpayer relief, not the fact that an election is coming up in November.

Taxpayers would not have to intervene to receive the cheques. Anyone eligible based on their 2021 return would receive a check.

Other programs include a six-month suspension of the state’s 1% food tax, as well as a six-month reprieve from the fuel tax inflationary adjustment. This is equivalent to maintaining the fuel tax at its current level rather than increasing it by 2 to 3 cents.

Democrats are also proposing to increase the state earned income tax credit by one percentage point, bringing it to 19% of the federal tax credit. The EITC is a credit accessible to low- and middle-income households. It is a refundable credit, which means eligible individuals can receive a refund, even if the amount of the credit exceeds what they would otherwise owe in taxes.

Another proposal would allow a tax credit of up to $300 for owners who earn less than $250,000 individually or $500,000 jointly. The credit would be 5% of the property tax paid, up to a maximum of $300.

Another measure removes the sales tax on school supplies from August 5 to 14 this year. The tax holiday would also apply to qualifying clothing and footwear up to $125 per item.

It would also give teachers a tax credit of up to $300 beginning with the 2023 tax year, up from $250 in the current tax year, for supplies purchased for their classrooms and a credit for $500 for volunteer firefighters and EMS who held these positions for at least nine months in the tax year. The sponsors said these credits would be permanent.

“We look forward to reviewing this proposal,” Pritzker’s spokesperson said in a statement. “Our conversations with General Assembly members from both chambers have been productive, and we will continue to focus on providing fiscally responsible assistance to working families.”

Senate Minority Leader Dan McConchie, R-Hawthorn Woods, issued a statement criticizing the temporary nature of the proposal.

“The Senate Democrats’ proposal appears to be just one more election year publicity stunt,” he said in a statement. “According to their plan, checks and relief will arrive just before the election and then expire just after the election. This is not the real reform the people of this state want and need, and Illinois will see through this dishonest gimmick.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.

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