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With budget proposal and fiery address, Pritzker paints himself as progressive pragmatist

With budget proposal and fiery address, Pritzker paints himself as progressive pragmatist

Governor’s spending plan advances progressive-backed policies in tight fiscal landscape

By HANNAH MEISEL
Capitol News Illinois
hmeisel@capitolnewsillinois.com

SPRINGFIELD – In delivering his annual State of the State and budget address on Wednesday, Gov. JB Pritzker cast his administration as both progressive and pragmatic – a balance he’s worked to strike as his national profile has grown.

Some elements of the governor’s proposed spending plan, like using $10 million in state funds to eliminate $1 billion worth of Illinoisans’ medical debt, are hardline progressive ideas. Others, including a goal to achieve “universal preschool” by 2027, fit in with a more traditional liberal platform.

But Pritzker has also defined his success in traditional economic terms, putting particular stock into how New York City-based credit ratings agencies view Illinois’ finances, while also positioning Illinois as a hub for emerging technologies like electric vehicles and quantum computing. 

Read more: Pritzker proposes over $2B in spending growth, backed by tax increases for corporations, sportsbooks

As Illinois faces an influx of migrants from the southern U.S. border Pritzker has leaned into a leadership style that prioritizes progressive ideals while projecting an image of fiscal responsibility.

“We didn’t ask for this manufactured crisis,” Pritzker said Wednesday in making good on his promise to propose another $182 million toward the state’s migrant response. “But we must deal with it all the same.”

Read more: Pritzker commits another $182 million to migrant response, details to come next week

Both approaches were on display during his hourlong speech Wednesday as he blasted Republican Texas Gov. Greg Abbott, who has so far sent about 35,000 migrants to Chicago since his administration began bussing asylum-seekers in 2022. He also blasted former President Donald Trump while again criticizing President Joe Biden for not providing a more coordinated migrant response.

“Children, pregnant women, and the elderly have been sent here in the dead of night, left far from our designated welcome centers, in freezing temperatures, wearing flip flops and T-shirts,” Pritzker said. “Think about that the next time a politician from Texas wants to lecture you about being a good Christian.”

 

Progressive proposals

The governor was met with big applause from Democrats in laying out his proposed “Healthcare Consumer Access and Protection Act,” which would, in part, ban “prior authorization” requirements for mental health treatment.

Pritzker characterized the practice of prior authorization as a way for insurance companies to deny the care that doctors have prescribed.

Additionally, the governor’s plan would ban the sale of limited duration health coverage plans in Illinois – the sort of plans, Pritzker said, that often don’t comport to the most basic coverage requirements in the Affordable Care Act, like pre-existing conditions. Twelve other states have banned what the governor called “junk insurance.”

“Now I know how hard the insurance industry will fight me on this. But let me be perfectly clear: I am willing to spend serious political capital and put my shoulder to the wheel to get this done,” he said, after telling the story of a state employee whose insurance denied coverage for open heart surgery. 

Read more: Pritzker to call for health insurance reforms in State of the State address

Pritzker is also proposing spending $10 million in state funds to buy Illinoisans’ past-due medical debt that’s been sent to collections. Partnering with national nonprofit RIP Medical Debt, which buys debt for pennies on the dollar on the same market that collections agencies purchase the rights to the debts, the governor said Illinois could “relieve nearly $1 billion in medical debt for the first cohort of 340,000 Illinoisans.”

The governor spent time noting two key places he said Illinois fails its Black citizens:  maternal mortality and disproportionate rates of homelessness. 

Read more: Pritzker signs bill aimed at ending homelessness

To combat Black maternal mortality rates, Pritzker proposed helping more community-based reproductive health centers to open, citing Illinois’ first freestanding nonprofit birthing center in Berwyn as a model.

“Black women in our state are three times more likely to die from pregnancy-related causes than white women,” he said.

Pritzker proposed spending an additional $50 million on the state’s “Home Illinois” program launched in 2021, in part to “attack the root causes of housing insecurity for Black Illinoisans.” He cited a statistic that Black people make up 61 percent of Illinois’ homeless population despite only being 14 percent of the state’s general population.

Additionally, the governor proposed a $1 million pilot program for free diapers for low-income families as well as a $5 million increased investment in an existing home visit program “for our most vulnerable families” with babies in their first year.

His budget also includes $12 million to create a child tax credit for families with children under three with incomes below a certain threshold. Though that proposal received applause during the speech, the funding is far below the $300 million advocates have been pushing for in their own proposal for a child tax credit.

Among the successes Pritzker pointed to on Wednesday, perhaps the most salient is his claim that Illinois’ new “Smart Start” early childhood program – proposed last year in the governor’s second inaugural address – had exceeded its first-year goals.

The program aimed to create 5,000 new preschool seats last year, but ended up creating 5,823, Pritzker said – a 15 percent overperformance. 

“As a result, right now we have over 82,000 publicly-funded preschool classroom seats – the highest number in our state’s history,” Pritzker said. “Staying on the Smart Start plan, we will achieve universal preschool by 2027.”

Echoing his 2022 election-year call for a temporary pause on the state’s 1 percent tax on groceries, Pritzker on Wednesday proposed nixing the grocery tax altogether.

“It’s one more regressive tax we just don’t need,” he said. “If it reduces inflation for families from 4 percent to 3 percent, even if it only puts a few hundred bucks back in families’ pockets, it’s the right thing to do.”

But local governments, which receive that grocery tax money, were sharply critical of the plan.

 

Fiscal focus

Even while proposing a series of progressive expenditures, the governor also sought to cast himself as a pragmatist when it comes to state finances. The state has seen strong revenue performances in the past few years as the nation’s post-pandemic economic recovery has surpassed expectations and avoided a recession.

But in November, the governor’s own economic forecasting office predicted a nearly $900 million deficit in the fiscal year that begins July 1.

Read more: Pritzker to mull tightening fiscal landscape in budget address this week | ANALYSIS: Pritzker urges ‘careful’ approach as current-year surplus could be followed by deficit

“Our FY25 budget proposal makes some hard choices,” Pritzker said Wednesday. “I wish we had big surpluses to work with this year to take on every one of the very real challenges we face.”

The governor stressed that the state treated federal COVID-era stimulus money as “one-time revenue” instead of windfalls that were built into year-over-year spending. As a result “we are not facing the budgetary challenges that other big states are this year,” he said. Pritzker noted that California is facing a deficit in the tens of billions of dollars. 

Illinois’ once-paltry “rainy day” fund now has $2 billion socked away, the governor noted, and the state has paid off high-interest debt during his five years in office.

To mitigate Illinois’ previously projected deficit, Pritzker is proposing to more than double the tax rate paid by sportsbooks on profits – a change that would bring in an estimated $200 million annually. He also proposed extending an existing cap on operating losses that businesses can claim on taxes, which could help generate more than $500 million, the governor’s office claims.

Another revenue generator proposed by the governor: raising $101 million by capping a sales tax credit retailers are allowed to claim. But business groups on Wednesday signaled they’d put up a fight. 

In his first few months in office in 2019, Pritzker used his fresh political capital to muscle a $15 minimum wage ramp through the legislature – a long-fought-for progressive policy goal – followed closely by a trip to New York City to meet with executives at the influential big three credit ratings agencies.

When Pritzker took office, Illinois’ credit ratings were hovering around “junk” status after a two-year budget impasse under his predecessor, Republican Gov. Bruce Rauner. And though Illinois suffered a final credit downgrade in the early months of COVID, the state has since received nine upgrades.

Read more: State gets 9th recent credit upgrade as administration faces scrutiny for pandemic unemployment handling

The governor on Wednesday held those upgrades in high regard.

“My one line in the sand is that I will only sign a budget that is responsibly balanced and that does not diminish or derail the improving credit standing we have achieved for the last five years,” he said.

Even after those nine upgrades, Illinois’ credit ratings are still among the lowest in the nation due to decades of downgrades that preceded the budget impasse. Credit rating agencies consistently cite Illinois’ long-term unfunded pension liabilities as one driving factor.

To that end, on Wednesday Pritzker proposed changing a pension payment “ramp” put in place in the mid-1990s. Under the so-called “Edgar ramp,” named after former GOP Gov. Jim Edgar, Illinois has been on a path to fund its five state pension systems 90 percent by 2045.

But Pritzker believes it’s more fiscally prudent to aim for 100 percent funding in the systems by 2048. The administration also suggested redirecting money currently paying down old debt to pensions once the debts are retired in the next decade. 

Less than two hours after his speech, one bond house signaled its approval.

“Importantly, the pension proposals are long-term in nature with the biggest changes coming in 2030 and later,” said a statement from Eric Kim, head of state government ratings at Fitch Ratings, noting the plan “could help reduce risks associated with the state’s pension obligations and improve credit quality.”

Pritzker, who used his inherited wealth to build venture capital businesses before running for governor, has also styled himself as an executive who welcomes businesses and fosters new and emerging technologies.

After signing a major renewable energy law in 2021, Pritzker set his sights on making Illinois a hub for electric vehicle manufacturing. Once every few months he makes public announcements with tech industry leaders in one of his pet project areas that’s earmarked for about $500 million in funding from the state’s infrastructure budget: quantum computing.

On Wednesday, the governor also nodded to a data center tax credit he signed during his first year in office with Republican support.

“Thanks to our bipartisan tax credit legislation, Illinois is now the world’s fourth largest data center market,” he said, also noting the state set records for film and TV production revenue, as well as hotel industry revenue in fiscal year 2023.

Though Republicans and the business community have deemed Illinois overregulated and stifling to industry, Pritzker has been pushing to change that narrative.

“In fact, on average, a new business moved to Illinois or expanded here every single day last year,” he said Wednesday.

 

Migrants and a national lens

The governor rose to Democratic political prominence during the early months of COVID-19 as a foil to Trump’s response to the pandemic. But with a president of the same party occupying the White House, Pritzker has walked a fine line criticizing Joe Biden’s response to a different national issue: an influx of migrants from the southern border.

Pritzker, a leading Biden surrogate who fought to bring this summer’s Democratic National Convention to Chicago, has repeatedly called on the White House to be more involved in coordinating migrants and make the asylum and work permitting application process easier and less costly.

He’s also taken on an adversarial role to Chicago Mayor Brandon Johnson, the progressive elected to the office last year, showing public frustration with Johnson’s disorganized response to the thousands of migrants bused in from Texas.

In November, Pritzker made state funding available for a 2,000-bed shelter in the city – something that has yet to come to fruition.  

And last week, Pritzker – alongside Cook County Board President Toni Preckwinkle – bypassed the mayor in announcing a joint $250 million funding plan aimed at keeping shelters open through the end of 2024. 

The governor, who’d been discussed by national media as a potential presidential candidate in 2024 – and is still mentioned as an option for 2028 – broadened the scope of his speech Wednesday to national politics when talking about the state’s migrant response.

Pritzker called out congressional Republicans who suddenly walked away from negotiations on federal immigration reform earlier this month, accusing the GOP of backing out “because Donald Trump told them to, and they’re afraid of him.”

He further criticized Republicans who “find it hard to put country over party” and predicted GOP members would be “looking for a microphone” after his speech “so they can start yelling about sanctuary cities and immigrants taking our tax dollars.”

And he urged the press to ask those same GOP members whether they supported the federal immigration bill before Trump tanked its chances.

“We don’t have any clear idea how long Governor Abbott intends to hold the nation hostage, but his political stunt will eventually come to an end,” Pritzker said, mentioning a $5 million set-aside in his budget proposal to plan for shelter conversions when the flow of migrants finally does slow. 

The governor ended the migrant-focused portion of his speech with a challenge to legislative leaders who’ll spend the next few months crafting a budget.

“I won’t pretend any of this is easy, but it would be irresponsible to do anything but come here, lay out the scope of the challenge, tell you what I think we need to do, and then work with you to make it happen,” he said.

Andrew Adams contributed.

 

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of print and broadcast outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

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Hannah  Meisel

Hannah MeiselHannah Meisel

Hannah has been covering Illinois government and politics since 2014, and since then has worked for a variety of outlets from NPR affiliate stations to a startup newsletter. She’s a graduate of both the University of Illinois at Urbana-Champaign and the U of I’s Springfield campus, where she received an M.A. through the Public Affairs Reporting program and got her start reporting in the Capitol.

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