Juiced Up Budgets In Other States Attributed To Federal Aid, But Pritzker Claims Credit In Illinois – Wirepoints

By: Mark Glennon*

This claim by Gov. JB Pritzker in his State of the State speech on Wednesday just might be his biggest whopper yet, which is saying something: “Let me set the record straight for you — our state budget surpluses would exist even without the money we received from the federal government.”

To show why that’s untrue, in this column, we will look at Pritzker’s claim in relation to what’s happening and what is being said in other states.

Countless stories from around the nation are easy to find about state and local governments so flush with cash from federal handouts that their challenge is “too much money,” as the Associated Press put it.

“The ultimate effect of the pandemic was a net positive,” said a city manager in California where sales tax revenues are soaring. “Isn’t that unbelievable? It’s just crazy to think of that.” Despite its problems, the State of California has a budget surplus of $45 billion, enough to send a check for $1,125 to every person in the state.

“I just wish I could close my eyes and wake up back in the mansion and be [current Governor] Kathy Hochul,” said former New York Gov. David Paterson, referring to the cash windfall.

Total state tax revenues from last April through November rose 20% compared to the same period in pre-pandemic 2019, according to the Urban Institute. “States are swimming in cash,” said a Wall Street Journal headline. “Massive cash flow…Rolling in revenue,” wrote the Pew Institute. “Governors across the country are sitting on mounds of cash just when they need it most: election season,” wrote Politico.

Why?

Because of federal assistance, as most of those reports describe, both direct and indirect.

About $200 billion of federal cash went directly to Illinois, of which Illinois got at least $8 billion.

That’s just the tip of the iceberg, however. Tax revenue spiked up for a number reasons that are also often discussed. Inflation drove up prices bolstering sales tax revenue. Consumers spent their stimulus checks. A strong stock market drove up capital gains taxes.

But all those were driven by the absurdly excessive total federal pandemic relief, which is about $10 trillion and still growing. Nobody can deny that ten trillion dollars didn’t create inflation, increase incomes, stimulate the economy and bolster the stock market, all of which increased state revenue.

The same story played out in Illinois. We recently documented in detail how the total pandemic relief for Illinois drove up state tax collections. Total pandemic relief in Illinois is now nearly $200 billion. As a result, compared to pre-pandemic 2019, individual income tax revenues are up 23 percent. Corporate tax revenues are up 101 percent (72 percent when you back out the corporate tax hike) and sales tax revenues are up 20 percent. In all, the big three taxes are adding $8 billion more in revenues.

I can find no other governor denying the role of federal assistance in their cash bonanza. To the contrary, most recognize it or even express thanks. Vermont’s Governor Phil Scott, for example, said in his budget address that “we have to remember this is one-time economic recovery money,” and he worked that concept through the entire speech.

California Governor Gavin Newsom went further, thanking his friends in Washington. “It’s a deep point of pride to see someone that’s a beneficiary of a stimulus check or young child tax credits,” Newsom said in his budget speech. “It’s a point of pride when California leads the nation and you see those policies reflected in proposals coming out of the White House.”

No such magnanimity from Pritzker, who claims his supposed $1.7 billion surplus is all thanks to him and his colleagues.

After denying that federal assistance had anything to do with it, he explained who he thinks should get credit: “Painstaking work has been done in coordination with the General Assembly and Comptroller Susana Mendoza over the last 3 years to diligently and meticulously reverse the irresponsible decisions of the past and ensure that responsible budgeting would become the rule, not the exception.”

What he should have said, instead, is what every governor should be saying: “Thank you, federal taxpayers.” We will all be paying mightily for this for decades through higher federal taxes and inflation.

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We warned that the federal government didn’t need to pass most of its assistance to states. A year ago my colleagues published a special report showing, in detail, why additional aid to states under the then-pending American Rescue Plan was not needed. “The billions in reserves states had prior to the pandemic – plus their share of $150 billion in the CARES Act – more than covered the dire revenue shortfalls most states projected at the beginning of the pandemic,” said our report. Congress proceeded nevertheless to pass the plan, which included about $200 billion more for states.

It’s important to note, too, that we can’t find any substantiation for the supposed $1.7 billion surplus Pritzker claims, even using the phony government accounting Pritzker used. Look at page 60 of the actual budget proposal, which summarizes the numbers. There’s nothing close to that. The Illinois Policy Institute wrote here that “the $1.7 billion claim is not supported by the budget documentation.” And Americans for Prosperity Illinois tweeted this: “There’s a $2.58 billion discrepancy between @GovPritzker‘s tweets and his proposed budget. He tweeted a proposed suspension of the gas tax for one year, but his budget docs say the state will collect a record amount of gas taxes. Which one is it?”

*Mark Glennon is founder of Wirepoints.

Read more about Pritzker’s 2023 budget proposal:

• Full text of Gov. JB Pritzker’s combined State of State and Budget Address
• Illinois State Budget for 2023
• Credit the near $200 billion federal bailout, not Pritzker’s actions, for Illinois’ “improved” 2023 budget
• The states’ 2020 financials are in: Biden’s billions in new federal aid aren’t needed 
•  Illinois Budget Ignores $5 Billion Hole In Unemployment Insurance Fund (from 2021)