Budget Done — Building And Gambling Plans To Go
Illinoisans will soon pay more for gasoline and cigarettes. Those are just two tax increases needed to pay for a $45 billion infrastructure plan, which includes money from sports betting and additional casinos.
The Illinois House on Saturday approved a series of bills, dubbed Rebuild Illinois, taking pieces from previous proposals. Supporters of the plan characterized it as a compromise to address years of delayed fixes to the state’s highways, transit system and buildings.
“This bipartisan plan is backed by business, it’s backed by labor,” said state Rep. Jay Hoffman, a Democrat from Swansea, who helped hammer out the plan. “It’s backed by contractors as well transit officials and individuals who build roads and bridges and mass transit facilities.”
Many Republicans voted in favor on all three pieces of legislation, though it did draw criticism from some conservative lawmakers, particularly for doubling the gas tax.
The package now awaits a vote in the Illinois Senate, which is scheduled to meet in overtime session Sunday afternoon. If approved there, it would head to Gov. J.B. Pritzker, who has indicated he would sign it.
“The Rebuild Illinois plan will reinvigorate our economy and strengthen our rightful status as the transportation and supply chain hub of the nation,” Pritzker said in a statement after the vote. The freshman governor also visited the House floor Saturday evening, where he was hailed by House Speaker Michael Madigan.
In contrast to the gambling expansion and infrastructure legislation, lawmakers finished work on a state budget, which Pritzker also said he’d sign.
The heart of budget calls for spending more than $40.6 billion on state operations — funding a year’s worth of everything from schools and universities to prisons and the state police.
Elementary and high school districts would see an increase of $375 million, exceeding the $350 million annual minimum established in the 2017 education funding overhaul. State universities would see a 5 percent increase.
Lawmakers avoided many of the new and higher taxes Pritzker proposed during his budget address, like a new tax on shopping bags. That’s largely because of the “April surprise” — $1.5 billion in unexpected tax collections. That windfall prompted the analysts at the legislature’s nonpartisan budget unit to increase next year’s income tax revenue forecast by $725 million.
The budget does, however, impose a new tax on the insurance companies that participate in the state’s Medicaid program. It also counts on changes in the law around sales taxes for online purchases.
Paying For Infrastructure
The capital plan is split in two: transportation and buildings, with separate ways to pay for each.
The bulk of the money for new buildings or renovations to existing ones comes from a gambling expansion, with fees from new sports betting licenses as well as six new casino licenses, slot machines at racetracks and at O’Hare and Midway airports, and increased taxes on video gambling terminals.
One estimate puts initial revenue from upfront fees at about $700 million for the first year of full operations. But that would require all casinos to be up and running, the video gambling terminal tax increase fully implemented, and all available sports wagering licenses to be bought.
Chicago, Rockford, Danville, Waukegan, one of Chicago’s south suburbs, and Williamson County would each get a casino. Several labor groups argued these would help create thousands of jobs in communities that have been hit hard with unemployment.
With an OK from Chicago Mayor Lori Lightfoot, sports venues with a seating capacity of more than 17,000 – like Wrigley or Soldier fields — would have the opportunity to offer sports betting.
Lightfoot had expressed concerns that offering in-venue wagering would be problematic for a Chicago casino. Her opposition caused concern that negotiations would be extended through the weekend, but that was on Friday. By Saturday afternoon, she’d talked to Pritzker and removed her opposition to that provision.
Pritzker originally included fees from sports betting licenses to help balance his budget, and has since been set on a legalized program. In a written statement Saturday, Pritzker said he delivered on his promise to make it a “key element” of his legislative agenda.
Other funding sources include a cigarette tax of $2.98 per pack, up from the current $1.98, and a new 6 to 9 percent tax on fees for parking garages.
Both ideas came from Pritzker’s capital plan, which was released last month. He also suggested a fee on ride-sharing apps, like Uber and Lyft; taxes on streaming services, such as Spotify and Netflix; and higher alcohol taxes. Negotiations led to all of those being axed.
“I as a Republican in the House — I’m not entirely satisfied with all these sources,” said state Rep. Margo McDermed, a Republican from Mokena. “However, some of the sources which we found objectionable have already been removed.”
Lawmakers also lowered a sales tax exemption for trade-in vehicles.
The new revenue is expected to pay for “vertical construction” — everything from a development project near Soldier Field to new libraries and updated residence halls at universities to overhauled water infrastructure in cities across the state.
Gas Tax Doubling
On the transportation side, they stuck with user fees — what people pay to use the transportation system. The per-gallon tax on gasoline would double to 38 cents, the first increase since 1990. It would also continue to rise over time, expected to be less than penny per year, tied to the Consumer Price Index.
Still, not all were happy with the change.
“What is this struggle really about? It’s about politicians that want more money; they want more spending," said state Rep. Allen Skillicorn, an East Dundee Republican. "And if I hear my colleagues correctly, they want even higher debt."
What is this struggle really about? It’s about politicians that want more money; they want more spending."Rep. Allen Skillicorn (R-East Dundee)
As anti-tax advocates have pointed out, Illinoisans also pay a sales tax at the pump — separate from the gas tax. That money has gone to general state spending, but will start slowly shifting to pay exclusively for road improvements. The initiative was a compromise with business interests, which wanted to see the sales tax dropped altogether.
“Most people think all taxes they pay on gas goes to fund roads, bridges and transit,” said Todd Maisch, head of the Illinois Chamber of Commerce. “We get to correct a major policy flaw.”
Maisch acknowledged consumers might not be happy about the gas tax increase, but he said that’s the only way to pay for needed road repairs.
On top of that, the cost of license plates will go up, too, increasing from $98 to $148 for most vehicles, and title fees will increase by $60. Truckers and farmers will pay $100 more for registration for trucks and trailers.