(The Center Square) – Illinois businesses hit by losses because of government COVID-19 restrictions could collectively be on the hook for half-a-billion dollars in tax liabilities if Gov. J.B. Pritzker gets his way. There’s growing opposition.
Pritzker said Wednesday the lame-duck session underway in Springfield should decouple the state tax code from a recent federal change to lower tax liabilities for businesses hurt during the pandemic.
“That would essentially deprive Illinois of revenues that it otherwise should get and it’s literally a technical fix,” he said.
Friday his administration said the fix would increase the state’s coffers by half-a-billion dollars.
U.S. Sen. Dick Durbin, D-Springfield, Friday couldn’t immediately speak to Pritzker wanting to decouple from the provision Durbin voted for, but said the governor is in a tough spot.
“Gov. Pritzker faces a terrible dilemma,” Durbin said. “A fiscal mess, and economic situation that’s very troubling, a pandemic which makes it hard to get back on your feet and little to no help from Washington.”
The state’s budget is $4 billion out of balance. The governor revised the shortfall after voters rejected the progressive income tax. The budget banked on that passing and on the federal government sending direct payments to state coffers, something that never materialized.
A growing number of groups say the governor’s proposed “decoupling” from the federal tax relief means a $500 million tax increase for Illinois businesses.
NFIB Illinois Director Mark Grant said that’s the last thing businesses need during a pandemic.
“It just takes away an avenue for our small businesses, sole proprietors to be able to recover from this incredible economic damage that’s been done to them over the last year,” Grant said.
NFIB joined in opposition to the proposal with Chicagoland Chamber of Commerce, Grain and Feed Association of Illinois, Hospitality Business Association of Chicago, Illinois Chamber of Commerce, Illinois Hotel & Lodging Association, Illinois Licensed Beverage Association, Illinois Manufacturers’ Association, Illinois Retail Merchants Association, Technology & Manufacturing Association and the Valley Industrial Association.
“We urge the Governor and legislature to reject this massive tax increase at a time when thousands of small businesses across the entire state are struggling to stay afloat during a pandemic and government-imposed shutdowns,” the group said. “This will have a dramatic impact on every aspect of business, including some of our most decimated industries. We understand the desire to find revenue, but this is the opposite of an ‘all-in’ approach.”
One sector in Illinois has been hit hard during the pandemic. The National Restaurant Association said in a recent report Illinois lost a net of 31,100 eating and drinking place jobs in November, "which was easily the highest among the 36 states that experience unemployment declines."
Another element the governor announced Friday freezes incentive programs like the Blue Collar Jobs Act that was approved in 2019, a $20 million impact.
State Rep. Tom Demmer, R-Dixon, said with businesses closed after the pandemic, the state needs to be more, not less attractive.
“Taking away yet another piece of relief for them could cause even further revenue hits to the state budget and decimate jobs and communities across Illinois,” he said.
Demmer said he’s unclear if the governor has the power to freeze such incentives the legislature put in state statute.
“Again I’ll remind you, a bill that passed with bipartisan support and that he himself signed that says in statute businesses shall be eligible for these incentives starting on Jan. 1 of 2021,” Demmer said. “The fact that he’s seeking to take this unilateral action I think continues a trend that we’ve seen out of the governor’s office of government by the executive branch alone. That’s not the kind of leadership for Illinois.”
Lawmakers are in session through Thursday.