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Illinois legislators eye $870 million in tax increases ahead of budget deal

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(The Center Square) – The Illinois Senate is discussing a tax increase package for the coming fiscal year to raise an additional $870 million, but late Saturday there was still no movement on the overall budget or the budget implementation bill.

Legislators were scheduled to adjourn Friday, but had contingency days scheduled for the rest of the month. A budget plan has been filed, as has a budget implementation bill (BIMP), but neither were discussed in committees late Saturday.

Just before 9 p.m. in a Senate Executive Committee, senators heard about a Senate amendment to House Bill 4951 which included the revenue package that would raise $827 million in taxes for the state coffers. There are also a slew of tax credits proposed in the plan.

The 1,302-page bill contains more than 30 provisions ranging from a tiered tax on sports betting companies to the legalization of ground-based sparklers that are nonexplosive like cones, showers of sparks, fountains, repeaters and cakes with a 3% tax.

“Cannabis and fireworks,” said state Sen. Chapin Rose, R-Mahomet.

“We’re going to have a good Fourth of July,” said bill sponsor state Sen. Celina Villanueva, D-Chicago.

For sports betting companies, a 20% privilege tax would be for companies making up to $30 million, a 25% tax for earnings up to $50 million, 30% for up to $100 million, 35% for up to $200 million and 40% for up to $200 million. That’s expected to raise around $200 million.

Retailers would be capped at $1,000 a month in what they can take in the credit they get for facilitating the collection and remittance of sales taxes on the sale of goods. That’s expected to raise $101 million.

Also new to state revenue, if the measure is approved, is a tax on re-renters of hotel rooms, which could generate $25 million in new taxes for the state.

Among other measures, the proposal includes a slew of tax credits. A child tax credit would equal to 20% of the credit allowed to taxpayers in 2024. In 2025, the amount goes up to 40%.

A new credit as part of the Local Journalism Sustainability Act would give $15,000 in tax credits to local media outlets hiring qualified journalists with an additional $10,000 credit for a local journalist that fills a new position. Total credits can’t exceed $5 million for the first-come, first-serve credit.

There are also tax credits for live theater production, music and musicians, volunteer emergency workers, and a credit for wages paid to “returning citizens.” That’s the new term being given in the proposal, striking out “ex-felons.” That tax credit would give employers a 15% credit of qualified wages paid to an ex-felon not to exceed $1,500 through 2024. In 2025, that goes up to $7,500 and may not exceed $1 million.

An amendment to the package is still forthcoming.

Senate amendments to House Bill 3144 would bring about the end of the state’s 1% grocery tax but would allow municipalities to impose their own tax. It also would remove the referendum requirement for some municipalities to increase the tax in their own jurisdiction.

In other action, legislators advanced a Medicaid omnibus bill that will cost taxpayers an additional $66 million. Among the changes in that package are rate increases for various medical services. Pharmacists will also be allowed to test for flu, SARS, COV-2, strep and adult stage head louse.

It’s expected legislators will continue session Sunday.