Illinois Springfield Capitol

Coming off of a prolific first year in office, Governor Pritzker delivered his FY 2021 budget address on Wednesday, February 19th, 2020.  The Budget Address began with Governor Pritzker reminding everyone that before he took office, the State of Illinois was still climbing out of the hole created when Illinois went two years without a budget.  Pritzker believes that together, the Democrats and Republicans, began to figure out how to put the State back together in a bipartisan manner.  Before he took office, Illinois had $8 billion in unpaid bills, and a year later, that number has been reduced by $1 billion.  Due to the budget impasse, Illinois’ credit had been downgraded 8 times from 2015 to 2017, but thanks to the fiscal stability that has been brought to Illinois the last year, Illinois is enjoying its lowest interest rates since 2013.

 Pritzker focused on a number of cost saving measures that are projected to save the state over $750 million over three years. The main cost-saving initiatives will be with state agency operational efficiency, state agency consolidation, and the elimination of duplicative boards and commissions. In addition to the cost-saving opportunities, Governor Pritzker laid out a number of investment objectives.

Governor Pritzker’s investment priorities for FY 2021:

  • Early childhood education
  • K-12 education
  • Higher education
  • Health and social services programs (DHS, HFS, DCFS, DPH)
  • Criminal justice reform and public safety
  • Environmental and Cultural Resources
  • Economic Development and Infrastructure

In addition, Governor Pritzker announced support for Comptroller Mendoza’s legislation initiative filed by Senator Heather Steans that mandates annual contributions to the state’s Rainy Day Fund; his budget proposal would pour $100 million into the fund over the next 16 months.

A significant component of the budget for FY 2021 is the change in income and corporate tax rate that is set forth in Public Act 101-0008.   The changes to the tax rates will only happen if the voters approve the Fair Tax during the 2020 General Election.   Because it possible the voters may reject the Fair Tax, the Governor has created “budgetary reserves”. Though the proposal is positioned to be balanced regardless of the passage of the tax rate change, the funding healthcare services and education programs will receive will benefit if the Illinois Income tax rate does change. 

Investment Highlights

The proposed General Funds budget has an estimated $42 billion in total expenditures, and has a projected budgetary surplus of $108 million.

Health and Human Services. During the budget impasse, no area was harder hit than that of the health and human services in Illinois.  Governor Pritzker has prioritized this sector and is a large component for Governor Pritzker’s budget.  The FY 2021 proposal includes a $40 million increase to mental health and addiction treatment services.  The increase was made possible thanks to the revenue from adult use cannabis.  Other programs highlighted by Governor Pritzker include:

  • $4.5 million to restore the health care navigator program which helps small businesses and their employees find lower healthcare on the federal insurance market place
  • A $2 million increase to the Home Delivered Meals program for senior citizens
  • $1.5 billion for DCFS, a 20% increase from FY 2020
  • $7.4 billion for DHS
  • $27 billion for HFS
  • $738 million for Department of Public Health
  •  $1.3 billion for Department of Aging
  • $180 million or the Department of Veterans Affairs.

Environmental and Cultural Resources Investments.  These investments are aimed at reducing the State’s carbon footprint, while investing in salient infrastructure needs

  • $52.8 million for proper remediation of power plants’ coal ash
  • $651.5 million in capital appropriations to fund municipal water loans and grants
  • $399.3 million for transportation electrification, the Illinois Green Infrastructure Grant Program and grants for unsewered communities
  • $89 million for continued execution of grants from the VW Settlement Environmental Mitigation Trust Fund to continue reducing nitrogen oxide emissions
  • Reappropriations of $222.1 million from “Rebuild Illinois” to address statewide water resources, land acquisition and local grant programs

Economic Development and IT infrastructure.  This industry will receive $1.4 billion in total funding. This includes:

  • $77.5 million in funding for the next phase of the Enterprise Resource Planning System through the DoIT
  • $18 million for loans to social equity applicants to start and operate cannabis businesses
  • $2 million for the creation of the “One-Stop” New Business Permitting Portal
  • $500,000 for grants to supplement the “Connect Illinois” capital broadband initiative that was included in “Rebuild Illinois”
  • $5 million for the Illinois Longitudinal Data System 2.0 at DoIT
  • $3 million for State Board of Elections to improve and enhance election technology security
  • $3.9 million for upgrades to the GenTax system at the Department and Revenue. This is projected to increase collections by $50-78 million

The Illinois Constitution mandates the Governor deliver the annual Budget Address.  Now the General Assembly will take their turn at the budget.  The General Assembly has until May 31, 2020 to pass a balanced budget ahead of the July 1, 2020 start of FY 2021.

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Bio Link Prior to joining the Michael Best Strategies, Stephanie served as assistant counsel to Illinois Senate President John J. Cullerton. In her capacity, she reviewed and drafted legislation, analyzed bills, provided detailed memoranda on legislative matters of special interest to Senate leadership, and assisted members with committee testimony and floor debate of legislation. Expertise: Illinois Legislative Process, Illinois Administrative Process, Healthcare, Workers Compensation, and Alcoholic Beverage Law
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Bio Link David uses a unique and creative approach to meet his clients’ needs and objectives. As a Senior Associate for Michael Best Strategies, he works with his colleagues to identify and implement strategic opportunities that bring valuable solutions, results, and success for his clients. Expertise: Gaming, Transportation, Political Advocacy, and Education

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