By: Ted Dabrowski and John Klingner
On Tuesday’s Nov. 5 ballot there’s a nonbinding referendum that asks voters if they want the state to tax millionaires a 3% surcharge on the money they make over and above $1 million. In exchange for agreeing to target millionaires, Illinois voters can expect property tax relief, the referendum reads, though the referendum is noncommittal as to how much relief, if any, it would actually provide. The state says the 3% surcharge on millionaires will give the government about $4.5 billion in new revenues.
For the state to provide property tax relief, however, it would have to actually take some of those new tax revenues and commit them to property tax relief. And that’s where Illinoisans should be highly skeptical, we warned a week ago: “Given the upcoming budget deficits…there won’t be any money left over for tax relief.”
Sure enough, it only took a few days for Gov. J.B. Pritzker and his budget office to announce that billion-dollar deficits are on their way.
Pritzker’s team on Friday released its five-year budget forecast and said it expects a whopping $3.2 billion deficit for next fiscal year (2025-2026), a $4.3 billion deficit for the following year, and $5 billion-plus deficits in each of the years 2028 through 2030.
Those deficits effectively swallow up the revenues of the “millionaire’s tax,” leaving little to nothing for property tax relief. The administration would have to raise income taxes by another $4 billion-plus to provide both property tax relief and cover the deficits. How far down into middle-income brackets would Illinois politicians have to hike income tax rates to get that all money?
Not only do the above deficits make the referendum a farce, but they are a major contradiction to the praise the governor has heaped on himself for managing the state’s finances over the last few years, in particular during covid.
How can the wheels be coming off the bus now, when the national economy is humming along, interest rates are going down, and the governor has managed to “balance budgets”?
There are two big answers to that question. The first one is that Pritzker never actually fixed any problems. No spending reforms. No pension reforms. No tax relief. None.
The second answer to that question is that the governor and his Democratic supermajority used the windfall revenues from the covid bailouts to pay down the state’s bills, and then poured the rest into new spending (more on that below).
The covid bailouts were massive. More than $70 billion was given in loans and grants to businesses. Illinoisans got $30 billion in stimulus checks. State and local governments received more than $30 billion. Billions more went to health care and a host of other programs. All that money also had the knock-on effect of supercharging the state’s tax revenues.
It was all that money, and not Pritzker’s efforts, that covered up all of Illinois’ structural spending problems. Now the covid money is gone and reality is back.
Pay up
In 2020, before the massive covid bailouts kicked in, Illinois’ state budget was just $40 billion. Now the administration is committed to a whopping $63 billion budget by 2030 – a near-60% increase in just 10 years. It’s why we’re back to multi-billion-dollar deficits.
That’s all because Gov. Pritzker and his team spent much of covid’s windfall revenues on bigger labor costs, bigger pension costs, and far bigger spending programs, including Medicaid-like coverage for illegal immigrants. Illinois’ political leadership has ballooned the budget and now they’ll want everyday Illinoisans to pay up.
Illinoisans weren’t fooled four years ago because they knew they couldn’t trust state politicians with more taxing power. They rejected Pritzker’s first try at a progressive tax.
On Tuesday we’ll see if Illinoisans still don’t trust them.
Read more from Wirepoints:
- Even more evidence Illinois can thank the federal government’s covid bailouts for its budget bonanza
- Illinoisans should watch out for the next try at a progressive income tax on the November ballot
- Don’t look now, but here come the tax hikes on Illinoisans
- Illinois’ Gov. Pritzker delivers Democrats’ national economic pitch at DNC. A look at his own record is revealing.
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
As usual more tax income to the state coffers equal more wasted money. New revenue, open window, throw out. It’s not theirs so who cares.
Pensions Paid First used to repeatedly claim that the state had a spending problem and not a revenue problem. ….Oooooops! Looks like we have BOTH a spending problem AND a revenue problem.
Skin in the game… Do our fellow citizens, who meekly move from directive to directive understand that the tangible evidence of their skin in the game is the money they sacrifice across all of the varied taxes we pay? Do they get that taxes are their money that they CONTRIBUTE to the government for a return in-kind?
Our society is financially illiterate and this ignorance allows Illinois’ progressive overlords to persist in driving this disaster ever forward.
This gubner is disgusting.
I’m still waiting for some democrat genius to tell me how this isn’t as bad as the news reports make it.
What part of “it’s over” don’t you get? You have been warned that a freight train is fast headed your way. There are no brakes. Only a bunch of low brow morons running it. If you want to survive, you better get out of the way. If you stay where you are at, you will be flattened like roadkill. The choice is yours.
To those fortunate enough to have been able to leave this state, let me say congrats.
Illinois has been losing residents when the budget was supposedly balanced. Would it really be that surprising to see the exodus accelerate if taxes go up even more due to these billion dollar shortfalls?
Regarding “balanced budgets,” the best way to check what really happened is the annual CAFR, which contains audited, accrual-based financial statements. We don’t even have a recent one: The last one published is from 2022, and the auditors would not give a clean opinion on it. Inexcusable.
How long before the worst governor in the country starts blaming Bruce Rauner or President Trump for his mess? We all know he will never accept responsibility.
Pritzker is praying for a Harris win so he can get appointed to a nice position and be far away from this when the poop hits the fan.
He needs kommiela so she can flush more fed money down illinos toilet. Sick.
Over the years I have heard various schemes about property tax cuts including the lottery, casinos, assorted new fees and taxes and for those old enough to remember the actual income tax itself that has been increased over the years for you guessed it-property tax relief. No matter what it was the money was spent on all the assorted vote buying programs and here we are once again faced with another tax modification scheme that is going to save us money. Do people in Illinois ever learn?
I remember when Riverboat Casino’s had to happen ‘for the kids’
And where’s all the tax $ from pot going?
‘Do people in Illinois ever learn?’ NO!!!!
“The state says the 3% surcharge on millionaires will give the government about $4.5 billion in new revenues.” But IRS says that in the year 2021 Illinois residents filed a total of 33,090 returns with adjusted gross income over $1 million, a total AGI of $135,324,844. (https://www.irs.gov/statistics/soi-tax-stats-historic-table-2). How is he going to get $4 billion out of this? Or perhaps by “millionaires” he means “anyone with total assets > $1 million?” Or perhaps he is counting on inflation to raise nominal incomes?
Some years ago after a public outcry the Federal Government instituted what was known as “The Alternative Minimum Tax” (AMT) to assure that a few very wealthy families paid some taxes. As time went on, as you suggest, the wonders of inflation made the AMT applicable to many middle class families. Its a rather simple concept relying on basic mathematics that apparently Pritzker feels Illinoisans are not capable of. Based upon Illinois school report cards Pritzker just may be right too.
Over time, that certainly could happen. But it requires long-term thinking, which I hadn’t seen in the Pritzker administration.
Must have been taught math in Cps system.
Probably a ton of work, but it sure would be interesting to find out how many other states, or at least neighboring states, are trying to ‘bake-in’ all the COVID $bucks$ spending as permanent in future budgets on the dopey taxpayers dime…and I’m astounded it’s not even an issue in tomorrow’s election for R’s or D’s?
Democrats are like a drug addicts they have to reach the absolute bottom and JB is getting Illinois there quickly. Feds are going to have to figure out how to allow a state to declare bankruptcy.
Puerto Rico is the model of IL’s fiscal future, but w/o the Caribbean beauty. Leftist Democrats like Pritzker, Harris and Obama, seem fixated on Maduro’s Marxist Venezuela.
There will be no discussion in Springfield about budget cuts as everyone knows every single penny collected is for essential services provided by an already lean government. How uncaring, racist, misogynist, immoral to suggest otherwise.
The CEO of any 206-year-old, $50 billion corporation would be fired for projecting increasing multibillion dollar deficits over the next five years, but Illinoisans prefer to vote mediocrities like J.B. into high public office.
JB is merely giving his voters what they want. They are looting the treasury on behalf of their constituents.
The pork pie spending by Pritzker is out of control, way out of control. Record malfeasance given the Covid windfall.