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Illinois governor preps budget with temporary tax relief

by Yvette Shields - January 31, 2022

Illinois Gov. J.B. Pritzker will propose a one-time, $1 billion tax relief package when he unveils his proposed fiscal 2023 budget Wednesday, joining the wave of leaders of Democratic and Republican-run states in looking to tap surging tax collections to provide temporary or permanent cuts.

Fiscal managers might look at the state’s balance sheet and suggest using any surplus to help pay down the state’ burdensome pension tab of $139.9 billion or to further pay down a bill backlog that’s been trimmed $2.9 billion from highs in the $14 billion range, but some say there’s a potential longer-term benefit to tax relief.

“In an actuarially perfect world you would want to go and fix pensions but it's incumbent upon any governor to keep businesses and keep people in their state,” said John Mousseau, president and chief executive officer at Cumberland Advisors.

By providing a carrot in the form of directed tax relief to offset inflationary pressures, even if just for just one-year, the state could help its case in slowing or reverse out-migration, which Mousseau called a tall order for Illinois.

The governor “is trying to paint a better picture of Illinois,” Mousseau said. “As a portfolio manager you like to see an improved balance sheet and more revenue but also I want to live for tomorrow” and that entails holding onto and expanding the tax base.

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