Gas Tax Hike, Higher Cigarette Tax and More Gambling To Cover $45 Billion Construction Plan

Illinois lawmakers doubled the gas tax, raised vehicle registration fees and the tax on tobacco – all to gather money for a $45 billion statewide construction program.

Negotiations spilled into the weekend as an agreement on a gambling package – the primary funding mechanism for building improvements – fell apart on Friday, the last day of the spring legislative session.

The Illinois House remained in Springfield on Saturday to reach a deal, saving both the plan to legalize sports betting and giving Republicans some tax breaks and other business-friendly initiatives they lobbied for.

Senators returned on Sunday to finalize the plan. Gov. J.B. Pritzker said he will sign the package.

Several Republican lawmakers signed onto the tax increases.

“What we stated is that before we are going to commit to votes that our priorities, things that we have felt that our voices have been lost with respect to supporting the business community, must be recognized,” House Minority Leader Jim Durkin said on Saturday.

The support came in the form of tax breaks for new data centers, phasing out of the franchise tax, eliminating the cap on what stores can get back for collecting the sales tax, among other measures.

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.

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. Lawmakers also lowered a sales tax exemption for trade-in vehicles.