$1.8 billion tax relief deal struck with help from embezzlement

Illinois House Speaker Emanuel

Illinois House Speaker Emanuel “Chris” Welch, D-Hillside, briefs reporters on a budget deal reached between Democrats, including $1.8 billion in tax relief in part by freezing a raise fuel tax automatic, Thursday, April 7, 2022, in Springfield, Ill. But despite the extra cash, officials are counting on taking money from an open account to clean up leaking underground fuel storage tanks to make up for lost fuel tax revenue from the road building fund. Behind Welch is Governor JB Pritzker, left, and Senate Speaker Don Harmon, D-Oak Park. (AP Photo/John O’Connor)


Governor JB Pritzker and leaders of the Illinois House and Senate on Thursday announced agreement on a state spending plan that aims to tackle near-record inflation by returning $1.8 billion to taxpayers.

The agreement stems from a fuel tax freeze, a one-year suspension of sales taxes on groceries, a per-household property tax rebate of up to $300 and increased tax credit for low-income working families.

“Illinois will get $1 billion in tax relief at the pump, at the supermarket checkout and in their property tax bills,” Pritzker said outside his office in the state Capitol, flanked by the president of the Senate Don Harmon and Speaker of the House Emanuel “Chris” Welch. “In addition to that, we’re expanding the Earned Income Credit, sending checks direct to working families.”

Despite a projected surplus of more than $1 billion this year and next, the tax relief relies in part on using a different account. In this case, the road fund money lost to the fuel tax freeze would be made up for by taking $140 million saved to clean up underground fuel tanks that pose a danger to the environment because they are leaking. .

According to the Illinois Fuel and Retail Association, about 5,000 sites have been cleaned up or are in the process of being remediated, in compliance with state Environmental Protection Agency regulations under the 26-year-old law. . The Leaking Underground Storage Tank Fund, funded by a separate gasoline tax of 1.1 cents per gallon, reimburses repair costs, less a $10,000 deductible.

The fund is responsible for these cleanups. Josh Sharp, CEO of the fuel and retail group, said the EPA estimates its liability at between $900 million and $1 billion. Even without the diversion, at a typical annual payment of $65 million, it would take almost 14 years to pay off this debt.

This leaves homeowners to complete cleanups while awaiting reimbursement of significant upfront costs, much like sellers who have waited years for state reimbursement and who Pritzker says are finally covered in this budget with a $4 reimbursement. $1 billion in overdue bills.

“The question is, can they keep their doors open?” Sharp asked. “Probably. Would it be better, once you’ve spent a considerable amount of money, to be reimbursed from a fund that’s supposed to be there just for that purpose? Yes, that would be ideal.

Pritzker’s EPA maintains an online database of 30,046 sites targeted for cleaning leaking storage tanks. But the agency did not respond Thursday to requests for information on the status of those projects or with financial data related to the LUST Fund.

“These are funds that we believe are not needed for the LUST fund, but obviously the LUST fund will continue even after this temporary tax relief,” Pritzker said.

In a year when Pritzker and his legislative colleagues trumpeted fiscal restraint, the move recalls a darker fiscal period in the early 2000s when Democratic Gov. Rod Blagojevich and House Speaker Michael Madigan concocted government spending. ‘fund sweeps’, taking what appeared to be large unspent balances into special funds intended to bolster the operating budget.

Concern over a shorted road fund stemmed from Pritzker’s budget proposal in February, which set the stage for fighting inflation with the suspension of the fuel tax as part of a $970 million tax cut. The fuel tax has come under particular scrutiny because just three years ago lawmakers raised it for the first time in 30 years and tied it to inflation to deal with costs of deteriorating infrastructure.

But the budget would forestall an expected 2.2 cent rise due to inflation on July 1, to 41.4 cents per gallon of gasoline.

This did not sit well with transportation proponents, who noted that it would cost transportation projects $135 million and stall the pouring of concrete on long-overdue repairs.

The current $140 million balance of the LUST Fund would not be used, but incoming revenues would be diverted to the roads.

House Revenues Speaker Michael Zalewski, a Democrat from Riverside, called it a “weighing in on stocks.” Relief at the gas pump, he said, “is the most concrete thing we can do that we believe our residents will feel the effects of without further hurting the overall fiscal position of the state.”


Follow political writer John O’Connor at https://twitter.com/apoconnor

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