On Feb. 2, 2022, Illinois Gov. J.B. Pritzker delivered his annual state of the state and budget address. The $45.345 billion proposed fiscal year (FY) 2023 budget is a balanced budget that builds off a projected $1.7 billion surplus from FY 2022. Pritzker emphasized that Illinois is in its best fiscal position of this century. His proposal includes a variety of programs to maintain and improve the state’s fiscal health going forward.

Pritzker proposed a $600 million payment to the Budget Stabilization Fund in FY 2023 and an additional $275 million payment in FY 2024. For the first time since 1994, the state will contribute $500 million above the minimum required contribution to its pension systems. Pritzker also announced the Illinois Family Relief Plan, which will provide $1 billion in tax relief to Illinois families impacted most by the pandemic and recent inflation. It would freeze the state’s 1% grocery tax ($360 million); suspend the scheduled 2 cents per gallon gas tax hike ($135 million); double the state property tax rebate maximum, to $300 per homeowner ($475 million); and waive license fees for frontline healthcare workers and liquor license fees for restaurants and bars ($38 million). Tax cuts from the Illinois Family Relief Plan are scheduled to last for only one year but could be extended if revenues remain strong.

The proposed FY 2023 budget appropriates remaining federal funds from the American Rescue Plan Act (ARPA) and Infrastructure Investment and Jobs Act (IIJA). The issue of the state’s approximately $4.5 billion in unemployment debt remains unresolved. Expect the vast majority of the remaining $4.1 billion in ARPA funds to be spent on repaying unemployment debt. Any debt that cannot be covered by ARPA funds will be funded by tax hikes on employers, employee benefit cuts or a combination of both. Page 58 of Pritzker’s budget proposal states that he began meeting with stakeholders in the General Assembly, business and labor to reach an agreement on how to repay unemployment debt. The Governor’s Office of Management and Budget has further information about the proposed FY 2023 budget.

Following the budget address, Democrats strongly praised the governor’s FY 2023 proposal. Both Senate Appropriations Committee Chair Elgie Sims (D-Chicago) and Comptroller Susana Mendoza predicted that Illinois would receive a third consecutive credit rating upgrade under Pritzker if the proposed budget is passed. Alternatively, Republicans believe the one-year-only tax cuts included in the Illinois Family Relief Plan do not address long-term financial problems, and serve only as a gimmick to boost the governor’s reelection campaign.

FY 2023 General Funds Summary

• $45.8B GRF revenues.
• $45.345B GRF expenditures.

FY 2022 Supplemental and Revised Budget Outlook

• Strong recovery from COVID-19 pandemic.
  • 600,000 jobs added from pandemic low point in April 2020.
    • Illinois’ job growth is above the national level.
  • Higher-than-anticipated corporate tax revenues from FY 2022 BIMP (Public Act 102-16) — some funds shifted to future budgets.
• $1.7B projected surplus in FY 2022.
  • First time in more than 25 years with back-to-back large budget surpluses.
  • Surplus would have existed even without federal ARPA funds.
• $4B debt repayment by end of FY 2023.
  • FY 2022
    • $1.981B final payment on Federal Reserve MLF loan two years early — saves taxpayers $82M in interest costs.
      • $650M in collectively bargained cost savings with employees.
      • $515M in savings achieved through negotiations with insurance companies and providers.
    • $898M to eliminate remaining delays in state employee/retiree health insurance program.
    • $230M to address all unfunded liability in College Illinois! Prepaid Tuition Plan.
      • Saves taxpayers $75M.
    • $213M accounts payable reduction.
    • $300M additional pension contribution.
  • FY 2023
    • $200M additional pension contribution.
    • $179M accounts payable reduction.
  • $1.05B in state real estate consolidation savings.
    • $300M in taxpayer savings from consolidation of state real estate holdings.
      • Reducing state leased footprint by 640,000 sq. ft.
      • Lower annual operating costs — reduce cost of leased Chicago office space from $41 per sq. ft to $20 per sq. ft.
    • $750M in taxpayer savings from Thompson Center sale to private buyer.
      • Private buyer assumes all liabilities and pays state $70M in cash.

Budget Stabilization Fund (Rainy Day Fund)

• $600M in FY 2023 to restore the Budget Stabilization Fund, which has not received dedicated appropriations since 2004.
• $79M per year from Cannabis Excise Tax revenues to Budget Stabilization Fund, in addition to one-time $600M payment in FY 2023.
• $200M in FY 2024.

Pension Obligations

• $9.6B contribution from GRF to fully fund state retirement systems.
• $500M contribution above the required minimum state pension contribution in FY 2023.
  • $300M in FY 2022 supplemental budget.
  • $200M in FY 2023 budget.
  • Reduces liability by an estimated $1.8B over the minimum contribution.
  • First time since 1994 that the state will contribute above the minimum.
• Expansion of pension buyout program — reduced liability by an estimated $1.4B already.

Illinois Family Relief Plan

• $1B in tax and fee relief to families — only for FY 2023.
  • $475M from doubling of property tax rebate maximum to $300 for those eligible for an income tax credit.
  • $360M from 1% state grocery tax freeze.
  • $135M from suspension of scheduled 2 cent per gallon motor fuel tax hike.
  • $38M from license fee waivers for frontline healthcare workers and liquor license fees for bars and restaurants.
• These tax cuts work to address areas of spending where families have been impacted most by recent inflation.

Healthcare

• $25M to Illinois Community College Board to administer the Pipeline for the Advancement of the Healthcare (PATH) Workforce Program.
  • Remove barriers to workforce entry.
  • Obtain industry-recognized credential or community college certificate.
  • PATH Program applies to nurses, certified nursing assistants, respiratory therapists and EMTs.
• $2M to increasing funding to the Nursing Education Scholarship program.
• $2.5M to IDPH and to education agencies to administer the Community Health Worker Certification Program.
• $180M to hospitals, clinics, behavioral health providers and home health workers for the Healthcare Workforce Initiative.
• $500M for changes to the nursing home rate structure.
• $21M to waive certain healthcare licensing fees.

FY 2023 Capital Budget

• Capital Reappropriations
  • $1B reappropriation of ARPA capital projects.
  • $336.2M for IDOT reappropriations from CARES, CRRSA and ARPA.
• New IIJA Capital Appropriations
  • $15.8B to IDOT for multimodal infrastructure.
    • $11.2B for 30% increase in formula funds.
  • $1.2B for drinking water and wastewater programs.
  • $556.5M to IEPA for lead service line replacement.
  • $50M to IDNR for abandoned mined lands reclamation.

Agency-Specific Appropriations

Early Childhood and K-12 Education

• $498.1M increase in ISBE funding — total GF budget of $9.738B.
  • $350M increase in K-12 evidence-based funding formula.
  • $54.4M increase in early childhood education funding.
  • $96M increase for transportation and special education grants.
  • $12M increase for regional offices of education to address truancy and chronic absenteeism.
  • $2M increase for agricultural education programs.
• Spend remaining federal funds for elementary and secondary school emergency relief — $6B from ARPA.

Higher Education

• $208M increase in higher education funding — total higher education budget of $2.202B.
  • $122M increase to MAP program.
  • $68M, or 5%, increase to universities and community college operations.
    • FY 2022 supplemental appropriation is also $68M.
  • $2.5M increases to adult education and career and technical education programs at community colleges.
  • $2.3M increase for minority teacher scholarships.

 Department of Children and Family Services

• $250M increase to DCFS — total DCFS budget of $1.325B.
  • $87.1M for investment in rate reform for private sector providers to address staffing shortages of social services workers.
  • $15.1M to hire 360 additional staff.
  • $29.7M for foster homes program.
  • $10.3M for adoption and guardianship.
  • $8M for protective/family maintenance day care.
  • $25M to provide new residential capacity.

Department of Human Services

• $5.253B total GF budget for DHS.
  • $62.8M for implementation of CILA rate calculator effective Jan. 1, 2023.
  • $32M for direct service providers’ wage increase of $1 per hour effective Jan. 1, 2023.
  • $96.4M to the Home Services Program.
  • $250M for two-year funding of the RPSA to address firearm violence.
    • $235M from ARPA.
    • $5M from GRF for staffing and operations.
    • $10M from DHS funds.
  • $70M for 9-8-8 call centers and crisis response services.
  • $300M of Strengthen & Grow Child Care Grants made available.

Healthcare and Family Services

• $8.08B total GF budget for HFS.
  • $450M for Healthcare Transformation Collaboratives.
  • $500M for nursing home rate reform and a new provider assessment.
  • $150M for implementation of the Pathways to Success Program for children with serious mental illnesses.
  • $140M to support behavioral health rate payments.
  • $180M to preserve and grow the healthcare workforce with a focus on Medicaid providers in underserved areas.

Department of Public Health

• $209.7M total GF budget for DPH.
  • $10M to support hiring of 175 positions.
  • $1M for sickle cell prevention, care and treatment.
  • $2.5M for funding the Community Health Worker Certification Program.
  • $20M, in addition to $2B in federal funds, for public health preparedness and COVID-19 response.

Department on Aging

• $1.343 total GF budget for Department on Aging.
  • $100.7M for the Community Care Program.
  • $14M for a 70 cents per hour rate increase for the Community Care Program.
  • $14M for home-delivered meals.
  • $4M for caregiver support services.

Department of Veterans’ Affairs

• $158M total GF budget for DVA.
  • $17.5M for the Chicago VA home.
  • $5M for partnership with DHS to develop veteran suicide prevention strategies.

Illinois State Police

• $328.1M total GF budget for ISP.
  • $18.6M increase to fund a cadet class of 300.
  • $5.4M for new crime lab in Decatur opening in August 2022.
  • $4.5M for an additional 500 officer-worn body cameras per the SAFE-T Act.

Law Enforcement Training Standards Board

• $26.9M total GF budget for LETSB
  • $10M for camera grants to local law enforcement agencies.
  • $3.5M for additional resources and operations needs from the SAFE-T Act.

Department of Corrections

• $1.642B total GF budget for DOC
  • $16.3M for staffing for Joliet Inpatient Treatment Center opening Fall 2022.
  • $18M for temporary medical staffing needs, reentry placements for releases, facility education and vocational programming, and fixed facility expenses.
  • $15M for IT investments to finalize high-speed rollout and network setup at all facilities — includes infrastructure and device upgrades.

Illinois Emergency Management Agency

• $35.2M total GF budget for IEMA.
  • $3.4M to fill headcount in response to COVID-19 pandemic.
  • $20M for the Illinois Nonprofit Security Grant Program.

Illinois Criminal Justice Information Authority

• $78.4M total GF budget for ICJIA.
  • $50M increase to R3 program.
  • $20M to fund Gang Crime Witness Protection Program.
  • $545,100 for the Innovation Institute.

Illinois Department of Juvenile Justice

• $121.4M total GF budget for IDJJ.
  • $2M to begin purchasing equipment for IYI-Lincoln.
  • $1.9M to expand number of community providers.

Department of Commerce and Economic Opportunity

• $76.2M total GF budget for DCEO.
  • $3M for production process improvement and R&D funds for businesses.
  • $5M for federal grant matching funds for small businesses for R&D on technology of interest.
  • $15M for new capital appropriation to continue the Prime Sites Program.
  • $35M for capital grants to support improvements in commercial corridors and downtowns that have experienced disinvestment.
  • $15M for matching funds to support Illinois entities seeking competitive federal awards that align with the state’s economic development.
  • $38M for multiyear expansion of Employer Training Investment Program.
  • $7M for new manufacturing marketing program.
  • $5M for new small business support funding through Office of Minority Economic Empowerment.
  • $100M in IIJA funds for broadband expansion — utility disconnection avoidance credits to low-income households against their summer utility bills and weatherization services for households.

Department of Natural Resources

• $66.5M total GF budget for DNR.
  • $56M for Open Space Lands Acquisition and Development grants for local governments for community park projects.
  • $39M for improvements to state-owned sites.
  • $1.2M for DNR administration of water resources management.

Environmental Protection Agency

• $1M for enforcement of the Clean Air Act and Energy Transition Act.
• $113M to spend federal IIJA funds for lead service line replacement loans.
• $2M for lead service line inventory and planning grants to communities.
• $9.1M for funding of IIJA energy programs to promote efficiency, conservation and state energy programs.
• $8.5M for new EV consumer rebates.
  • CMS budget includes $30M to electrify the state vehicle fleet.
• $195M for capital reappropriations from Rebuild Illinois-funded initiatives.

Department of Innovation and Technology

• $30M in IIJA funds for cybersecurity.