Gov. Pritzker Signs Bipartisan Balanced Budget, Fair Tax Rates
Governor JB Pritzker today signed into law a bipartisan, balanced budget for $40.1 billion in operating expenses that begins to pay down Illinois' debt and return the state to fiscal stability - as the state moves closer to a fair income tax than ever before.
Not only is the bipartisan budget balanced, but it will also generate $150 million in surplus that will be targeted to pay down a portion of the state's remaining bill backlog.
"A new era of fiscal stability has arrived in Illinois," said Gov. JB Pritzker. "This budget balances our obligations while making consequential investments for working families, for our communities, and for our future. And we are on the verge of finally creating a fair income tax in Illinois that puts the burden of fixing our finances on people like me, who can most afford it, not the 97 percent of Illinoisans earning less than $250,000."
The major components of the budget invest in the Governor's key priorities of education, healthcare, public safety, vital human services and criminal justice reform, while fully funding the state's pension contributions and making progress on the state's bill backlog. The budget also includes business-friendly efforts such as phasing out the corporate franchise tax.
This budget will go into effect on July 1, 2019, the beginning of the state's 2020 fiscal year. Overviews of the budget and all the governor's 2019 legislative accomplishments are attached.
Overall, this budget represents a bridge to the fair tax, a constitutional amendment that the Legislature sent to voters for approval in November 2020, and which could be included in the FY21 budget.
To move the fair tax forward, the Governor signed SB 687, which would go into effect if and when voters approve a constitutional amendment to Illinois' budget in November 2020.
In that general election, voters will have the opportunity to change the state's constitution and allow for more fair rates, in which those earning more than $250,000 will pay more and 97 percent of Illinois residents would pay the same or less in income taxes. Illinoisans can find the tax rates for their family at www.illinois.gov/FairTaxCalculator. The fair tax legislation also includes a 20 percent increase in property tax credits and a $100 per child tax credit, both of which are phased out at higher income levels.
Rates on all taxpayers are currently 4.95 percent; SB 687 would reduce the rates on portions of filers' income at or below $100,000 as show in the chart below. Rates would begin to increase above the current law when filers' income exceeds $250,000.