AT THE STATEHOUSE
SPRING SESSION BROUGHT A BALANCED BUDGET
The 2022 spring legislative session was unique in its brevity. Lawmakers generally wrap up spring session with an end-of-May deadline. Similar to a college student turning in a final paper online at 11:59 p.m. the day it’s due, often, budgeteers toil away until the final hours — or even a bit beyond — to shore up details right until that May 31 deadline.
Initially, spring session began with some harboring doubt that the truncated adjournment date to which legislative leaders agreed could be met. The COVID-19 pandemic was mid-omicron spike as the session kicked off in January, and legislators began by meeting virtually.
The shortened session — the second year of the 102nd General Assembly — followed a regular session in 2021 that lasted until September. Gov. JB Pritzker had signed into law bills from 2021 that included ethics, energy and election-related measures. This spring, lawmakers proved they could pass a balanced budget in much less time than usual — with the final moment of session wrapping in the early hours of April 9. The General Assembly also worked to pass legislation that included debt repayment, tax relief and public safety.
Comptroller Susana Mendoza called the budget — which Gov. Pritzker signed into law April 19 — “the most responsible budget a governor of either party has signed in Illinois in decades.”
“Overall, I believe this budget adds greatly to the momentum we have built toward further credit upgrades, which will mean further savings for taxpayers,” Comptroller Mendoza said. And indeed, additional credit upgrades followed — which means Illinois has now earned six credit upgrades in less than a year, after 20 years of nothing but downgrades from the major bond-rating agencies.
Budget makers were tasked with prioritizing a surplus of funding in a budget year of strong economic growth as Illinois rebounded from the pandemic-related economic downturn. With two weeks left in the legislative session, legislators passed a debt package to eliminate the group health insurance backlog, reduce what the state owed to the federal government for unemployment insurance, make the College Illinois Program solvent and pay additional dollars, beyond what statute called for, into the pension system. This $4.1 billion package was signed into law on March 24 and went into effect immediately.
After passing the debt relief package, talks continued about the remaining portions of the Fiscal Year ’22 supplemental budget and Fiscal Year ’23 budget. Legislators negotiated how to allocate additional dollars to health care, education and public safety as each sector struggled to recover from the effects of the pandemic.
On April 7, Democratic leaders announced a budget agreement. The package that passed included investments into the Rainy Day Fund and Pension Stabilization Fund, both of which Comptroller Mendoza strongly advocated for.
The $1 billion addition to the Rainy Day Fund will ensure that Illinois is on better footing for the next economic downturn and signals that the state is well on its way to financial stability. The language also included annual deposits of $45 million into the Rainy Day Fund starting in the 2024 fiscal year. The additional dollars dedicated to the Pension Stabilization Fund — $500 million total between Fiscal Year 2022 and 2023 — will reduce the pension liability by $1.8 billion.
The budget package also included $1.8 billion in relief to taxpayers. This tax relief includes a rebate on property taxes up to $300, a tax rebate of $50 per individual and $100 for each dependent child (up to three per household). These rebates will be given out in the form of checks or direct deposits sent from the Comptroller’s office. People who have not filed their tax returns have until Oct. 17, 2022, to file in order to qualify for these rebates.
The tax package also suspends the grocery tax and motor fuel tax and provided a sales-tax holiday on school items. The legislation also expands eligibility for the Earned Income Tax Credit, providing $100 million in additional relief to households that need it most. The budget overall spent a total of $45.9 billion and prioritized sectors such as public safety, nursing homes and education.
Comptroller Mendoza has already made payments into the long-neglected Rainy Day Fund, as the budget called for. “The first year I took office in 2016, the Rainy Day Fund had withered to under $60,000 — not enough to run state operations for 30 seconds,” Comptroller Mendoza said. “I salute Gov. Pritzker and the legislators who voted for this responsible budget that is reviving the Rainy Day Fund.”
Bond rating agencies cited Illinois’ shoring up of its Rainy Day Fund as one of the reasons they raised the state’s credit rating this year. Rainy Day funds exist to help states weather rough patches. During the bull markets of five to six years ago, many states seized the opportunity to shore up their Rainy Day funds, and thus were well-prepared to endure the shutdowns of the COVID-19 pandemic.
Unfortunately, that was not the case in Illinois. The state found itself in the middle of a two-year budget impasse during that time in which the Rainy Day Fund was raided to pay bills by the previous administration. That kind of irresponsible budgeting cost the state eight credit downgrades in the two years before Comptroller Mendoza took office.
Comptroller Mendoza said the $1 billion infusion into the state’s reserves and subsequent $45 million annual appropriations are a good start — “but we have a long way to go to get the Rainy Day Fund to where the experts say it needs to be.”
“In this fall’s veto session, I will be asking the General Assembly to take up HB 4118 again to require larger annual contributions to both the Rainy Day Fund and the Pension Stabilization Fund going forward,” Comptroller Mendoza said. ■
