Eye On Illinois: Tax hike likely not in budget, but may return on campaign trail

Gov. JB Pritzker delivers his budget address a week from Wednesday in Springfield. Plenty of reporters and analysts are offering informed speculation about what will be included in the proposal, but here’s one thing you’re almost certainly not going to see: a 20% income tax hike.

Now, it’s not going out on much of a limb to say a first-term incumbent facing reelection in November won’t propose a massive income tax increase while a pandemic, supply chain debacle and inflation continue to affect daily lives. However, it’s worth noting as campaign season approaches that not only did Pritzker fail to deliver on one of his biggest legislative priorities, but his team also did so while invoking a boogeyman who never did materialize into reality.

In September 2020, Lt. Gov. Juliana Stratton spoke about the referendum to abolish 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%, regardless of their level of income.”

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

Since, and despite strong control of both legislative chambers, there’s been next to no noise about reviving the graduated tax push and not a hint of a threat to raise the income tax by any percentage point, let alone 20.

That’s not a complaint as it relates to my wallet. Sales tax income has increased, federal pandemic aid proved helpful – $3 billion remains unallocated – and there are other early indicators Illinois might be headed toward a better fiscal future than the darkest days of the last decade.

But there’s a chance those (clearly empty) threats, combined with the failed referendum, come back to hurt Pritzker politically. That will be especially true if his budget proposal doesn’t go far enough to address many unanswered questions about long-term financial health, such as the $4.5 billion unemployment insurance trust fund deficit, local governments being forced to cut services just to keep track with mounting pension obligations and major problems in both the departments of Childcare and Family Services and Veterans Affairs.

We’re certain to hear more about Pritzker’s budget plan in the coming days, and he’ll most definitely be using this legislative session as a means of proving he’s earned another four years as chief executive.

But in order to make that case to voters, Pritzker will at some point have to address whether his next term would include a second attempt at a wildly unpopular reform or if tax hikes really are on the table.

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