Illinois General Assembly budget talks stall over sportsbook tax hike, retailer discounts

Mitchell Armentrout/Sun-Times

SPRINGFIELD — Another year, another budget proposal — and another long wait.

In what’s become a springtime rite in the Illinois Capitol, state legislators on Wednesday were bumping up against their self-imposed deadline to approve an annual spending plan, as Democrats wrangle over a sports betting tax hike, retailer discounts and other key revenue proposals floated by Gov. J.B. Pritzker.

Lawmakers needed to file a budget bill by Wednesday night in order to wrap up the legislative session Friday as originally scheduled by Illinois House Speaker Emanuel “Chris” Welch, D-Hillside, and state Senate President Don Harmon, D-Oak Park.

Pritzker’s staff and leaders of both chambers were still hammering out numbers into Wednesday evening within their Democratic supermajorities, where some members have pushed back against tax increases recommended in Pritzker’s $52.7 billion budget proposal.

While an overtime session could extend at least a bit further into Memorial Day weekend, lawmakers officially have until June 30 to pass a budget, though a higher vote threshold looms for votes taken after May 31.

A top source of spending discord is Pritzker’s recommended hike of the 15% tax on sports betting revenue collected by sportsbooks up to 35%, which the governor forecasts would generate an extra $200 million for the state.

An army of lobbyists for corporate sports betting giants were making a full-court press in Springfield in an effort to shelve the hike on an Illinois industry that generated more than $1 billion last year. And their message — that more than doubling the tax rate would lead to worse odds for customers and send them to illegal sportsbooks — was resonating in corners of the House Democratic caucus.

“That’s a tax structure that’s tough for any industry, let alone a nascent one,” said state Rep. Curtis Tarver, D-Chicago.

State Rep. La Shawn Ford, D-Chicago, called it “a major sticking point” in the final days of session.

Pritzker’s office contends it’s a fairer share from corporate sportsbooks that have cashed in on Illinois bettors at a far lower tax rate than New York and Pennsylvania, where sportsbooks pay tax rates of 51% and 36%, respectively.

State Rep. Bob Rita, D-Blue Island, who has shepherded most gaming legislation in the Capitol, suggested the Illinois rate could fall somewhere below the 35% sought by Pritzker.

“It may not seem like it, but we’ve got a lot of time to figure this out,” Rita said.

Perhaps a bigger sticking point in budget talks has been the governor’s proposal to lower the tax discount retailers receive for collecting sales taxes, which his office says would net the state an additional $101 million. Retailers are currently reimbursed 1.75% of the sales taxes they collect.

Pritzker wants to cap those claims at $1,000 per month, which his office says would mostly impact large stores.

“There’s a lot of concern about how this would impact small businesses,” said state Rep. Will Guzzardi, D-Chicago, who previously filed a bill seeking to raise the retailer discount to 2.5%, capped at $500 monthly.

Pritzker's office previously directed state agency heads to prepare for possible cuts if his revenue ideas don't win statehouse approval.

During a lengthy House Democratic caucus, members were roll-called on their support for the sports betting increase and for the retailers cap. Neither appeared to have enough support from members as of Wednesday afternoon.

Moderate Democrats also raised concerns over the budget’s overall spending total, with concerns over how the state will fare with a looming fiscal cliff over the next two years.

Democrats were also grappling with Pritzker’s proposal to eliminate the 1% tax on groceries, which is staunchly opposed by mayors of local governments who reap its benefits.

And discussions were ongoing on the amount of state dollars to dedicate to caring for the influx of migrants from the southern U.S. border. Pritzker is seeking $182 million, under an agreement with Chicago Mayor Brandon Johnson and Cook County Board President Toni Preckwinkle, who have pledged about $70 million apiece to the effort.

And in another custom of late in Democratic-dominated Springfield, Republicans have been largely shut out of budget talks — even more so than usual, according to House Republican Minority Leader Tony McCombie, R-Savanna.

“Last year, there was at least a sense, at times, that they tried to bring us in a little bit. Now, we have no idea what’s going on over there,” McCombie said.

Mitchell Armentrout reported from Springfield. Tina Sfondeles reported from Chicago.