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Eye On Illinois: No tax hike in 2022 only a temporary reprieve

Looks like lawmakers won’t be forced to consider a tax hike after all.

On Sept. 24, nearly six weeks before the general election, Lt. Gov. Juliana Stratton spoke about the looming referendum on abolishing the flat rate state income tax in favor of a graduated system. Should the amendment fail, she predicted, lawmakers “will be forced to consider raising income taxes on all Illinois residents by at least 20 percent, regardless of their level of income.”

The amendment failed — rather spectacularly — on Nov. 3. The next day, Gov. JB Pritzker said “Everything is on the table” in terms of working toward a balanced budget for fiscal 2022.

But the executive branch’s forecasts were significantly different Tuesday when Pritzker’s office floated a preview of the budget address he’ll deliver Feb. 17. Though light on details, the document explains Pritzker will propose no spending increases, closing unidentified “corporate tax loopholes” to save $900 million and pushing ahead with the $711 million in cuts he detailed in mid-December.

Conspicuous in their absence is any reference to raising the income tax.

Just because the governor details a plan doesn’t mean lawmakers will go along, even under single-party control. But it’s pretty hard to envision a scenario in which the General Assembly pitches a tax hike plan the governor didn’t request.

Stratton wasn’t alone in projecting a tax spike as a consequence of a failed amendment. Post-vote, Pritzker wasn’t the only one grabbing at fiscal straws. Were those remarks little more than impotent threats? Aside from losing at the ballot box, what changed?

Democrats retained significant legislative majorities and conceivably could muster votes to raise taxes along the lines of what Stratton pitched, a 20% hike from the current 4.95% to 5.94%. Despite some power shifting in Washington, it remains unwise to construct a state budget with hopes of any meaningful support from the federal government in the form of coronavirus relief.

Capitol News Illinois reports current projections for the state’s deficit in fiscal 2022 are $3 billion. That’s a staggering figure, but recent estimates were as high as $5.5 billion. Pritzker said part of that improvement owes to his expediting the repayment of $700 million borrowed from the Municipal Liquidity Facility, a federal program. Furthermore, the state economy “performed more strongly than expected,” according to Prtizker’s office, which is not the kind of sentence anyone is used to reading in these pandemic times.

A spending freeze doesn’t rectify problems: public education, family services and unemployment are just three crisis areas, infrastructure always deteriorates and the pension fiasco remains unsolved. Plus there’s an election next year.

Considering a tax hike was always a matter of when, not if. This reprieve is fleeting at best.

• Scott T. Holland writes about state government issues for Shaw Media Illinois. Follow him on Twitter at @sth749. He can be reached at sholland@shawmedia.com.

Scott Holland

Scott T. Holland

Scott T. Holland writes about state government issues for Shaw Media Illinois. Follow him on Twitter at @sth749. He can be reached at sholland@shawmedia.com.