SPRINGFIELD — With the spring legislative session entering its final two weeks, state budget negotiations are starting to come into focus, even as lower-than-expected revenue forecasts put a damper on efforts to add spending beyond what Gov. J.B. Pritzker laid out in his $49.6 billion proposal. 

The downturn in tax receipts in the final months of the current budget year essentially erases a surplus that lawmakers were hoping could be used for a number of resource-starved programs.

It also gives state lawmakers much less flexibility than they had during the last budget process, when they doled out more than $1.8 billion in one-time tax relief and had enough left over to pay $1 billion into the state’s rainy day fund. 

“I think it’s fair to say that our revenues are no longer at the very strong level that they’ve been at for the last couple of years,” said state Rep. Will Guzzardi, D-Chicago. “We’re cooling off. And I think we have operated cautiously this entire budget cycle.”

The Pritzker administration for months has been privately and publicly urging  fiscal discipline, cautioning that the period of robust budget surpluses following the COVID-19 pandemic were likely temporary.

The governor’s office crafted its fiscal year 2024 budget proposal with revenue estimates more conservative than COGFA’s, meaning the impact of the revised forecast is minimal. The commission’s 2024 revenue forecast is about $800 million above governor’s proposed spending plan. 

“Responsible fiscal decisions have led to surpluses allowing us to pay off debt, save for our future, and let us prepare for the possibility of a revenue slowdown,” said Pritzker spokesman Alex Gough. “The governor will continue to work with the General Assembly to pass a responsible balanced budget that makes necessary investments while living within our means.”

In February, Pritzker unveiled his spending plan, which featured more than $1.2 billion in new education spending, including the annual $350 million boost to K-12 through the state’s evidence-based funding model and $250 million in new spending to expand access to early childhood education.

The latter is seed money for a program dubbed “Smart Start Illinois,” a multi-year effort to eventually provide every child with access to pre-K.

It was a modest departure from recent convention as, after years of holding the line on the creation of new spending programs, Pritzker green-lit outlays that extend beyond the next fiscal year.

Pritzker’s pre-K proposal has garnered bipartisan support. Capitol insiders say the plan, or at least some version of it, will likely make it into the final budget.

However, lawmakers have added their own spending priorities to the budget wish list this year, citing the “profound need” in many of their communities.

Progressives, for instance, have been pushing for the creation of a $700 child tax credit for low- and middle-income families.

The Latino Caucus has been pushing for the expansion of a program that provides health care to non-citizen adults who are otherwise ineligible for Medicaid benefits. The program is currently for those who are 42 or older, but some want to make anyone over the age of 18. 

Advocates for those with developmental disabilities are pushing for a pay increase for professionals who work with those individuals in community-based settings.

Healthcare providers and industry advocates are pushing for an increase hospital Medicaid reimbursement rates.

Local officials have been calling for a gradual restoration of the Local Government Distributive Fund, which is the share of the state’s income tax that goes towards municipalities, to 10%. 

“The thing about budgetmaking is that there’s very little that we do that isn’t deeply important to someone,” Guzzardi said. “And most of what we do in the budget is deeply important to all of us. It serves the most underserved folks in our communities. And there’s just a deep need, especially coming out of the pandemic.

“I know we had these flush years from a fiscal perspective. But from a community perspective, these have been lean years, these have been really difficult years and there’s so much trauma in our communities.”

Earlier this month, House Speaker Chris Welch, D-Hillside, appeared to rule out a full restoration of LGDF for cities and counties.

While there was hope a less generous child tax credit would still be possible, it appears off the table this session given the new budgetary constraints.

Some of the other proposals for new spending are still subject to budget negotiations. Whatever happens, the relatively remarkable level of fiscal discipline displayed by state lawmakers in recent years will be put to the test amid a desire to deliver more funds to various programs.

State Sen. Elgie Sims, D-Chicago, the lead budgeteer for the Senate Democrats, acknowledged in an interview with Lee Enterprises that “we have infinite needs and we have finite resources.”

“It’s balancing the needs of investing in people with the priorities and the resources we have available,” Sims said. “And that’s really what it boils down to. It boils down for us how we’re going to make sure that we’re doing the most good on behalf of all the people of Illinois.”

In addition to the spending asks from progressive lawmakers, social service agencies that do business with the state and advocacy groups, budget pressure is coming from existing programs, namely the state’s non-citizen healthcare program. 

Earlier this week, the Department of Health and Family Services revised its cost estimate for the program for the next fiscal year to $1.1 billion. Pritzker’s proposed budget only allocates $221 million for the program, putting it nearly $880 million out of whack.  

“There’s something to be said for compassion, that’s one thing. But this is getting out of control,” said state Sen. Sally Turner, R-Beason, echoing the complaints from Republicans about the growth of the program.

The first-of-its-kind program started during the COVID-19 pandemic as a way to insure mostly-undocumented non-citizens over the age of 65. The age was later worked down to 42 during budget negotiations in 2020. 

Despite cost pressures, however, there appears to be little appetite to rollback the program. And some lawmakers questioned and expressed skepticism over the department’s cost estimates for the program.

“I firmly believe that we can’t tell those folks, ‘Oops, too bad, we miscalculated and now you don’t have health insurance anymore.’ I don’t think that’s the position that we could take as a state,” Guzzardi said.

While budget pressures have ratcheted up in recent weeks, lawmakers involved in negotiations do not appear too worried, saying that the slowdown was anticipated and planned for.

“We weren’t going to stay on that pace, but I don’t think it’s a harbinger of gloom and doom,” Sims said. “I think we do have to monitor and be mindful of the concerns that are out there and the pending slowdown of the economy.”

Lawmakers return to Springfield on Monday. Adjournment day is slated for Friday, May 19.