Gov. JB Pritzker has “revised” his remarks about not raising taxes to balance the budget.
“It’s very important that we live within our means in this state, and that we not resort to tax increases as a way to, you know, to balance the budget,” Pritzker said Jan. 30.
Last week, when I asked him about his apparent rejection of tax hikes, the governor said: “What I said last week was that we should be living within our means and doing everything we can to do that. I’ve also said in previous press conferences, and still believe that taxes should not be the first but rather the last thing that we look at.”
The latest report from the Governor’s Office of Management and Budget projected Illinois is facing a $3.2 billion deficit in fiscal year 2026. Pritzker’s people have apparently been telling everybody who walks in the door that the state has no money to create or significantly expand the programs folks are demanding.
I’m told they’ve also hinted to at least some that there will be no new revenues proposed in the governor’s budget plan.
However, the door may still be open a crack for new revenues late in the budget negotiations, perhaps meaning “the last thing that we look at.”
Last year’s state revenue bill had a very rough time passing the House when several, mainly white moderate Democrats refused to vote for it. That has been taken by some to mean that tax hikes could be out of the question this spring.
But a longtime Statehouse type made a good point. It’s not that those Democrats were against tax hikes, he said, it’s that they believed they didn’t get anything to speak of in last year’s budget. “If they believed they were getting something, a Democrat will go (pantomimes voting for a bill), ‘Can I vote again?’ ”
To sell any tax hike back home, they must show how their districts benefit.
However, events could overtake them.
The Illinois Department of Healthcare and Family Services’ list of Medicaid recipients by House and Senate districts has been urgently circulated among legislators for the past several days, mainly because of congressional threats made to reduce or eliminate federal funding for the Medicaid expansion program.
Medicaid expansion covered all adults under the age of 65 who earn less than 133% of the federal poverty level. It has drastically decreased mortality rates for middle-aged people and has generally been seen as a success. Forty states plus the District of Columbia have opted into the program, which reimburses states for 90% of their costs. That large federal share is why several national Republicans are pushing to either end the program or significantly reduce the reimbursement rate.
Healthcare and Family Services says 772,233 Illinoisans were enrolled in the expansion program at the end of fiscal year 2024.
Federal dollars pay 90% of Medicaid expansion tab
Illinois spent about $815 million on the Medicaid expansion program during the last fiscal year, HFS says. The feds paid out $7.34 billion because, as noted above, they pick up 90% of the total tab, which is far more than the 50% match Illinois receives for “regular” Medicaid.
The point here is that Illinois has a trigger law that requires the state to withdraw from the expansion program three months after federal reimbursement falls below 90%.
So, if the feds had dropped its reimbursement rate to 50% last fiscal year, Illinois would’ve had to shell out $4.1 billion — about a $3.3 billion increase just to keep pace. That’s money the state doesn’t have. Hence, the trigger law.
The House districts with the most Medicaid expansion recipients in FY24, according to HFS, were Rep. Bob Rita’s 28th (15,557); Rep. Sonya Harper’s 6th (15,118); Rep. Nick Smith’s 34th (14,631); Rep. Sue Scherer’s 96th (14,103); and Rep. Lilian Jiménez’s 4th (14,055).
Rep. Rita Mayfield’s district had 8,714 expansion recipients last fiscal year. The Gurnee Democrat told my associate, Isabel Miller, “I do believe that we shouldn’t drop not one person. I think that we need to find the money one way or another,” suggesting that “reasonable cuts” be made to state agencies.
“I think that if we held everybody at FY24 levels, we would have enough money to at least fill in some of these gaps,” she said.
Sen. Dale Fowler, R-Harrisburg, said, “If changes in federal funding occur, I am committed to working with my colleagues to explore all options for preserving essential healthcare services and protecting our most vulnerable residents.” Fowler represents 18,174 Medicaid expansion recipients.
I doubt they’ll have the cash to do much of anything without new revenues.
Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.
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