Pritzker makes Illinois infrastructure move with a $41.5 billion plan

Register now

Illinois would borrow $17.8 billion to support a $41.5 billion six-year capital plan that relies on a 19-cent-per-gallon motor fuel tax hike and other new and increased taxes to fund infrastructure across the state, under a draft plan Gov. J.B. Pritzker’s administration outlined for lawmakers Friday.

In addition to the bonding, the preliminary draft package would rely on $7.04 billion of cash financing, $10.03 billion of federal matching funds, and $6.64 billion from local and private sources.


“Today, Illinois’ infrastructure is in dire shape. Overall, Illinois’ infrastructure has a C-rating and deferred maintenance backlogs at state facilities and educational institutions alone have reached $24 billion,” says the “Rebuild Illinois” plan that was posted on the Capitol Fax blog. It touts 540,000 jobs being supported directly and indirectly over the six years.

“Through a combination of bonding and consistent, annual pay-as-you-go funding, we can immediately begin to repair, maintain, and grow our economy,” reads the report that does not provide any additional detail on the borrowing, including how much would fall under the state’s general obligation credit or sales tax-backed program.

The big-ticket funding sources that help generate $1.78 billion of new annual revenue include $560 million coming from hiking the fuel tax, which has been 19 cents per gallon since 1990, and $490 million from an increase in the $101 vehicle registration fee with the size of the hike depending on the age of the vehicle.

Additionally the package relies on a series of other tax and fee hikes or changes with $120 million coming from an increase in the per gallon tax on liquor, $90 million from changes to the structure of the current video gambling tax that would also support the proposed operation budget, $60 million from changes in a sales tax exemption on some property purchases, $4 million from an increase in the $34 registration fee for electric vehicles, and $34 million coming from a hike in the real estate transfer fee on non-residential properties.

New taxes would generate $214 million from a levy on ridesharing, $150 million from a 7% levy imposed on cable, satellite and streaming services, and $60 million from a new parking garage tax.

The plan comes as lawmakers from both parties and representatives from transit agencies, unions, and the education and transportation sectors have been clamoring for an end to the capital funding drought.

The state’s $31 billion Illinois Jobs Now package is 10 years old and that package’s tax revenues don’t support any new borrowing.

Some minority Republicans were rankled by the size of the new and increased taxes, while others in the GOP were open-minded.

“Members of my caucus who were part of the capital working group received a briefing on the governor’s proposal this afternoon,” said Senate Minority President Bill Brady, R-Bloomington. “We look forward to these discussions continuing as we work toward a plan that addresses our state’s critical infrastructure needs and creates jobs.”

Democrats stressed that the package is subject to negotiations and at least advances the subject with the clock ticking on a May 31 adjournment date for the session.

“We’ve been eagerly awaiting a framework from the Pritzker administration. As the Senate has gone around the state and led this bipartisan effort, there have been many changes, and I expect many more to come. What you have here is an early draft of what a framework could look like,” said Sen. Martin Sandoval, D-Chicago, the Senate Democratic leadership’s point person on a capital plan.

As news of the proposal circulated Friday among stakeholders reaction was mixed.

"We are encouraged to see some of the ideas the Illinois Chamber has promoted included in their plan. However, most of the revenue in the governor’s proposal is not new revenue for additional maintenance and new projects, but rather existing state, federal, and local sources that were already planned,” Illinois Chamber of Commerce president Todd Maisch said in a statement.

Capital projects have often been used to persuade lawmakers to support tough votes and several lay ahead this month including final package of a constitutional amendment to allow for a progressive income tax rate structure.

Lawmakers could always return for a special session. While regular matters need only a simple majority to take effect immediately if approved before June 1, bonding always requires a three-fifths supermajority.

In the package, transportation would get $28.6 billion with roads and bridges seeing the biggest infusion of $12 billion and then transit with $3.4 billion. Higher education would get $2.4 billion and public school districts $3.5 billion. State facilities would see $4.4 billion in spending, with another $1 billion to environmental and conservation related projects.

Broadband development gets $420 million, health and human service $440 million, and economic and community development $711 million. The plan does not include $15.7 billion of other projects that have previously been appropriated for and are subject to annual re-appropriation.

The bonding would be spread out over the next six years so cost of borrowing is uncertain. The state pays the widest spreads among its counterparts but its market position has improved this month with its spreads down to 150 bps to the Municipal Market Data top benchmark beginning with its six year bonds compared to 178 bps on the 10 year and 168 on the long end at the start of the month. The state has about $39 billion of GO debt.

For reprint and licensing requests for this article, click here.
Infrastructure State of Illinois Illinois
MORE FROM BOND BUYER