Grocery tax eliminated under $53.1 billion budget approved by Illinois Senate

While requiring extra days past a self-imposed deadline, the Illinois Senate took the first step in passing the $53.1 billion state budget late Sunday night.

The budget for fiscal year 2025, starting on July 1, creates just shy of $53.3 billion in revenues and passed in a 38-21 vote.

The House is expected back in Springfield on Tuesday and will take up a vote at some point during the week before sending it to the governor's desk.

Hours of closed doors discussions among lawmakers on Friday, when the budget language was first filed, and Saturday fostered a product Democrats say matches their priorities. Some in the party still were hoping for more funding amid a year with tighter fiscal restraints.

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“I wish this were a perfect budget,” lead budget negotiator Sen. Elgie Sims, D-Chicago, said before the vote amid a 90-minute floor debate. “I’ve been here many years and I have yet to see one. But…this budget is fair, it’s balanced, and it provides certainty for us investing in our future.”

Just needing a simple majority, Democrats have the luxury of just needing consensus within the party to pass the budget. That allowed two members of the super-majority party to not vote for the budget, the near 3,400 pages contained in Senate Bill 251.

No Republicans again voted for a budget they felt "left behind" Illinoisans by prioritizing noncitizens and chastised increased spending, up more than $815 million from FY24. They regularly targeted Democratic Gov. JB Pritzker, claiming the latest budget is indicative of his aspirations beyond the governor's mansion.

"At the end of the day, folks, this is all about Governor Pritzker's dream of being President of the United States," said Sen. Chapin Rose, R-Mahomet, joined by the 18 other GOP Sens. in the chamber voting no.

Rose, the Republican lead budgeteer, added later that citizens are stuck in a "reality of higher taxes, bad schools, out of control spending." At the same time, however, others in the party found spending on higher education and capital projects to be too low.

Sports wagering, video gaming tax increases

Leading up to the vote, there was "significant enough" resistance among lawmakers to the governor's earlier budget proposal that would collect $1.1 billion in new revenues through tax increases. Likely wary of increasing taxes during an election year, lawmakers were able to lower that earlier sum to a range of $840 million to $870 million in tax increases.

To the chagrin of sportsbooks operators like DraftKings and FanDuel, among the increases is a staggered increase on the sports wagering tax, ranging from 20% to 40% dependent on their annual revenues.

The revised plan, originally calling for the rate to jump from 15% to 35%, is still expected to collect the same $200 million in additional revenues for the state. Overall, the approximately $350 million expected from the bumped tax will go to state coffers and capital projects.

Jeremy Kudon, president of Sports Betting Alliance, an organization representing sportsbooks nationwide, cast a gloomy picture on its impact.

"This tax hike doesn’t just threaten the legal, regulated sports betting market — it will have devastating effects for operators’ in-state partners, including the most vulnerable downstate casinos, who rely on sports betting revenue to create jobs and invest in communities," he said in a statement. "Sportsbooks across the industry will have no choice but to reevaluate their level of investment and participation in the state should this become law.”

A new inclusion is a heightened tax on video gaming. By increasing that rate from 34% to 35%, the state is anticipating an additional $35 million in tax revenues after receiving $818 million in the prior fiscal year. Funds from the tax mostly go to capital projects, but local governments where video gaming terminals are present also receive a cut.

Pritzker's wishlist largely in-tack

Pritzker revealed a $52.7 billion budget proposal before the General Assembly in February and, more than three months later, much of what the Democratic governor asked for he did receive.

That includes funding for the second year of the Smart Start Illinois initiative, putting the state to provide universal preschool by 2027, and $182 million to cover state expenses with the migrant crisis through the end of the year as part of a partnership with Cook County and Chicago. Another $440 million would go towards a Medicaid-style health benefits plan administered by the state for noncitizen adults.

A child tax credit included the budget is an expansion of the governor's earlier proposal originally intended for those three and under. That would've cost the state $12 million, while the new credit is eligible for children 12 and younger— running the state $50 million in FY25.

More: Repeal of state grocery tax could cost city of Springfield millions

Where there was deviation came from Pritzker's idea to eliminate the 1% grocery tax. The plan received considerable pushback from municipalities, who receive the funds, and ultimately reached a compromise with the state. Now, elimination of the tax won't occur until Jan. 1, 2026 and local governments will be able to institute their own tax not exceeding 1% without a referendum.

Contact Patrick M. Keck: 312-549-9340, pkeck@gannett.com, twitter.com/@pkeckreporter.

This article originally appeared on State Journal-Register: Illinois Senate approves $53.1B budget. Here's what you need to know