Gov. J.B. Pritzker’s $39 billion spending plan relies on shoppers paying a tax for every plastic bag they take home from the store, along with higher taxes on tobacco products, revenue from recreational marijuana licenses, legalized sports gambling and a tax on insurance companies that work with Medicaid patients.
The $39 billion spending plan is the largest in state history. Include matching federal funds, and the overall spending hits $77 billion.
The governor outlined plans for $1.1 billion in new revenue in his first budget address Wednesday in Springfield.
The new revenue will come from a variety of increased taxes, including $94 million from corporate taxes, $10 million for taxing e-cigarettes and $20 million from a 5-cent tax on plastic bags.
Republicans raised concerns about the governor’s budget proposal.
“I heard no spending cuts,” said state Sen. Dale Righter, R-Mattoon. “The only tax cut I heard was for people who are delinquent on their taxes and he’s going to give them a break to pay up.”
Pritzker’s budget also relied on what he said is an “insurance tax” on managed care organizations that work with Medicaid patients. That is expected to bring in $390 million.
Illinois Chamber of Commerce President and CEO Todd Maisch said he wants more details.
“I think that everyone in the private sector who is paying for their own insurance may very well see higher prices to go ahead and subsidize the Medicaid program,” Maisch said. “We need to see the details, but that’s a tax on insurance that will only make insurance more expensive.”
Budget documents provided by the governor’s administration said the $390 million will be from managed care organization assessments.
Pritzker’s budget includes an estimated $212 million in revenue from legalizing sports betting.
State Rep. Kelly Cassidy, D-Chicago, who’s been working on recreational cannabis legislation, was pleased to hear the governor promise marijuana legalization in his budget address.
“It’s ambitious to get it done in time, get it implemented in time for this fiscal year, but it’s absolutely doable,” Cassidy said.
A study by the Illinois chapter of the National Organization for the Reform of Marijuana Laws said recreational marijuana sales could generate up to $700 million in revenue on the high end and $400 million on the low end.
“Assuming that the stores stay open and produce and sell daily, they can get those numbers,” McCabe said. “If they run out and have to wait a month to restock, then those sales numbers and the tax revenue will not be met.”
But the Pritzker administration only anticipates bringing in $170 million from recreational marijuana from licenses and fees from cultivation and dispensary operations. The sales tax revenue from legal pot will be budgeted in the next fiscal year.
The budget proposal didn’t include new service taxes or an increase in the state’s income tax rates, although Pritzker did repeat his call for changing the state’s flat income tax to a progressive structure that would have higher tax rates for those who earn more for future budgets.
The budget proposal now goes to lawmakers. The next fiscal year begins July 1.
[Governor Pritzker is shown on left above during an earlier visit to Danville. Former Circuit Clerk Jerry Block is on right.]
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Some optimistic, others worried, about Illinois’ budget future
