Pritzker on Wednesday introduced a plan that relies on nearly $1.3 billion in new revenue from taxes on legalized recreational marijuana and sports betting, e-cigarettes, and plastic shopping bags, among other sources, all of which “precariously balances the current budget, but punts measures to address fiscal progress to future years,” S&P Global Ratings said Friday in a news release.
“It prioritizes service solvency at the expense of lower pension contributions and does not make meaningful progress toward tackling the $7.9 billion bill backlog or projected out-year deficits,” the ratings agency said.
In addition to his new revenue ideas, Pritzker proposes reducing pension contributions by $878 million in the budget year that begins July 1 by extending the state’s funding deadline by seven years. It’s one element of a multipart plan that also includes infusing cash into the severely underfunded retirement systems by selling unidentified state assets, issuing up to $2 billion in bonds, and dedicating $200 million in future years from the proposed graduated tax on top of legally required contributions.
S&P notes that Pritzker’s long-term plan “hinges largely on a tough campaign to pass a progressive income tax that requires a constitutional amendment.”
The Illinois Constitution mandates a flat-rate income tax. Changing to a federal-style graduated system, under which higher earners are taxed at a higher rate, would require voters’ approval. That couldn’t happen until the November 2020 general election at the earliest, and three-fifths majorities of the Illinois House and Senate would have to sign off first.