SPRINGFIELD – Gov. JB Pritzker said this week that the state remains “on a great trajectory from a fiscal perspective,” even as his office decreased its current-year revenue estimates in light of falling tax revenues.
The Governor’s Office of Management and Budget this week shaved $616 million off its estimate for current-year revenues, marking a downward revision of about 1.1 percent. The move corresponded with a $532 million, or roughly 1 percent, increased revenue estimate for the upcoming fiscal year.
The governor’s office now projects the current year will end with $50.7 billion in revenues collected. In his February budget proposal, he had proposed about $790 million in supplemental spending for the current year that would have brought total spending to $51.2 billion – an amount exceeding the new revenue estimate.
The proposed supplemental spending included $490 million in increased appropriations for state agencies, a $200 million added pension payment and $100 million for additional capital improvements at early childhood centers across the state.
The above chart shows the proposed supplemental state agecy spending included in Gov. JB Pritzker's February budget proposal. (Source: Governor's Office of Management and Budget)
Pritzker suggested at an unrelated news conference Thursday that spending for the current year could be brought in line with revenues by slowing the pace of agency spending.
“We’re talking about approximately 1 percent of the entire budget,” he said. “So knowing that this might be coming, we’ve ramped down some of the spending here and there within all of our agencies to make sure that we could cover that 1 percent difference.”
The downward revision to the current Fiscal Year 2023 estimate was due to revenues for the month of April coming in $849 million below what GOMB had projected, an indicator that pandemic-era state revenue spikes are beginning to slow.
“We understand that the broader economy is slowing down a bit,” Pritzker said at a Wednesday news conference. “And we also understood that the benefit to the economy of some of the stimulus that was put into it in prior years will also wane.”
As for the upcoming Fiscal Year 2024 that begins July 1, GOMB’s revenue estimate rose to nearly $50.5 billion. The governor’s office now projects to have $840 million more in revenues than the $49.6 billion spending amount he proposed for FY 2024.
That increase was partially driven by an expected influx of income tax revenue tied to an annual reconciliation process for prior-year business taxes. Recent changes to state and federal tax codes have led to a greater-than-normal amount of money being subject to the statutory reallocation process, according to the Illinois Department of Revenue, although GOMB warns some the revenue bump will be “one-time in nature.”
Still, that upward revision for the upcoming year would not be enough to cover a shortfall created by a cost overrun related to a state expansion of health care to noncitizens who would otherwise be ineligible for Medicaid benefits.
Those programs, which provide health care benefits similar to Medicaid to noncitizens aged 42 and older, are now expected to cost about $1.1 billion next year – a 400 percent increase from the original estimate of $220 million included in Pritzker’s February budget proposal.
The program was an initiative of Illinois’ Legislative Latino Caucus, passed in 2020 during the early months of the COVID-19 pandemic when Latinos were getting sick at a higher rate than white Illinoisans. It officially launched in 2021 for those age 65 and older but exceeded its anticipated cost within one month.
It has since been expanded twice to cover noncitizens age 42 and older, and the Democratically controlled legislature is considering expanding the program to noncitizens between the ages of 19 and 42. Under the state’s pre-existing AllKids program, noncitizens age 18 and under are already eligible for Medicaid benefits.
The Illinois Department of Healthcare and Family Services noted recently that the agency expects the federal government to cover about $100 to $120 million in health care costs in FY 2024 for noncitizens who are seeking asylum in the U.S.
Pritzker said Wednesday that he is hopeful lawmakers will come up with a solution for defraying some of the rest of that projected cost. On Thursday, he gave suggestions for solutions that he said were made possible by the flexibility the state has since the program is not subject to the same regulation as Medicaid, which is a joint program administered by the state and federal governments.
“It is possible, for example, that there could be – for some people at certain income levels – copays that would defray the costs of the program,” he said.
Another example, he said, would be to reexamine reimbursement rates.
“These are all things that I think are reasonable to consider to make sure that we’re reining in the cost but also serving the people who most need this health care,” Pritzker said.
The recent upward revisions to estimated program costs have prompted sharp criticism from Republicans. But in a news conference earlier in the week, state Rep. Lilian Jimenez, D-Chicago, pushed back against calls to end the program.
“Many immigrants in the state of Illinois do contribute to taxes. They pay their taxes when they work, they file their taxes with an ITIN number,” she said. “They are taxpaying members of this state and should be treated as such. And they’re also human beings, most of all, and we have to remember that when we talk about cutting this or cutting that.”
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