Supplemental spending: How Illinois could spend some of its $1.6B budget surplus

While eyes in Springfield shift to crafting the next budget, the current fiscal year still has 3 1/2 months left. And, with higher than projected revenues, supplemental spending is now on the table.

The Commission on Government Forecasting and Accountability announced revised numbers earlier this week, now seeing revenues grow to $52.6 billion in fiscal year 2024, ending June 30. It's a near $2 billion jump above the expected revenues when Gov. JB Pritzker budget into law in June and up $374 million from the Governor's Office of Management and Budget revised forecast in February.

Drawing the increase, COGFA officials told legislators during a committee hearing, were low unemployment figures, consistent consumer spending and an influx of $881 million in one-time revenues not previously tabulated in earlier projections.

Improved revenues and fending off concerns of a nationwide recession has state fiscal experts cautiously optimistic.

“During our last annual revenue meeting, we mentioned that many of the economic firms were still forecasting such a chance of a recession,” COGFA executive director Clayton Klenke told lawmakers Tuesday. “But we mentioned that the data that we saw coming in month to month gave us greater confidence that the economy would continue to chug along. And that is what we have continued to see.”

How much of a surplus is the state looking at?

The governor’s budget office is projecting current-year revenues will come in $199 million above previous estimates, allowing for a $1.6 billion surplus. Higher revenues means lawmakers have a larger surplus to work with and possibly target new spending on a host of items in the current fiscal year.

Gov. JB Pritzker signed the $50.4 billion budget in June 2023, the largest in state history. Now, the Democratic governor is requesting the General Assembly approve legislation allowing for $1.56 billion in additional spending.

More: Pritzker’s budget proposal calls for child tax credit, elimination of grocery tax

How could a surplus be used?

Broken down, the proposed spending calls for just shy of $1.2 billion from the General Fund, $350 million in transfers to meet one-time funding commitments and a $60 million change to lapsed appropriations. It also calls for an additional $205 million to the state's rainy-day fund, a major initiative of Comptroller Susana Mendoza.

Most of the General Fund spending would go towards the Illinois Department of Healthcare and Family Services, receiving $430 million, and $346.8 million to the state Department of Human Services. Together, those departments will receive just less than half of the total proposed supplemental package.

IDHS has been the lead state agency in providing shelter and services provided to the 36,000-plus asylum seekers in Chicago. The governor's proposed supplemental does call for it to be spent in-part to bolster those services, but not an exact line amount.

In the coming fiscal year, Pritzker is asking lawmakers to green-light an additional $182 million toward the state’s migrant response.

"We didn’t ask for this manufactured crisis," Pritzker said during his budget address last month, calling out Texas Gov. Greg Abbott for sending asylum-seekers to Chicago as a political stunt. "But we must deal with it all the same."

The spending is part of a $252 million agreement with Cook County, where roughly an additional $70 million is needed to cover expenses for the rest of the calendar year. Chicago could cover those remaining funds, but Mayor Brandon Johnson has yet to explicitly commit to city funds. On the other hand, the state's surplus could be used to fill that gap.

HFS would use supplemental funding to cover its Medicare expenses that have encountered delayed federal reimbursements and higher costs.

If these requests go through, the Governor's Office of Management Budget projects the state will conclude the fiscal year with a $68 million surplus.

Bipartisan backing

Pritzker has a favorable audience in both chambers where Democrats hold super-majorities in the House and Senate. Republicans will not likely get behind legislation allowing for increased spending on asylum-seekers, but could support new funding to the Illinois Department of Financial and Professional Regulation.

For years, the department has been hampered by delays when it comes to issuing new and renewal licenses. Lawmakers voted unanimously in November to create a new online licensing system, seen as a way to cutdown on red-tape.

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Pritzker's supplemental budget plans call for $16.3 million to implement the new system.

During a recent press conference, House Minority Leader Tony McCombie called the licensing issues an "ongoing headache" that has long-needed change.

"Many of us have seen first-hand the pain the agency causes our constituents who want to work throughout the state," McCombie, R-Savanna, said.

Look ahead

While the state may see a surplus now, the commission also estimates smaller revenues in the upcoming fiscal year. Its FY25 forecast projects $52.1 billion in General Fund revenues — $513 million less than the revised current fiscal year.

Their number is also $916 million less than the near $53 billion in revenues projected in Gov. JB Pritzker's proposed budget. COGFA's estimate however, the commission stressed, is based on current law and not the several revenue adjustments promoted by the governor.

Pritzker is calling for several changes, including an increase to the sports wagering tax and extending a cap on the amount of net operating losses that corporations can claim on taxes. Collectively, the adjustments would net an additional $1.1 billion in revenues.

Jerry Nowicki of Capitol News Illinois contributed to this report.

Contact Patrick M. Keck: 312-549-9340, pkeck@gannett.com, twitter.com/@pkeckreporter.

This article originally appeared on State Journal-Register: How Illinois could spend some of its $1.6B budget surplus