Governor Pritzker’s 2023 budget proposal affects transportation, other priorities in northeastern Illinois

Governor J.B. Pritzker recently released his fiscal year 2023 (FY23) state budget proposal and highlighted a projected $1.7 billion surplus for fiscal year 2022 (FY22). As the COVID-19 pandemic persists, the governor’s proposal prioritizes the state’s continued economic and fiscal recovery.

Governor Pritzker’s proposal would appropriate $112.5 billion for the operating budget, including $45.4 billion in general funds and $46.5 billion in the capital budget. The Chicago Metropolitan Agency for Planning (CMAP) analyzed how the proposed budget affects transportation and other policy priorities in the region and across Illinois.

Fiscal sustainability

The state has made changes in recent years to bolster its general funds, including increases to personal and corporate income tax rates, as well as administrative changes to the collection and disbursement of sales tax revenues. In FY23, total state-sourced revenues are projected to be $41.8 billion, a 4 percent increase compared to FY22.

In addition to projecting increased revenues, the budget forecasts total general funds appropriations in FY23 will fall to $45.4 billion, compared to $47.0 billion in FY22. FY23 expenditures include programmatic and fiscal governance proposals, such as a contribution to the Pension Stabilization Fund, funds for property tax rebates for homeowners, and funds for local governments to accompany a proposed one-year freeze on the local grocery tax. Due to projected budget surpluses, the proposal also includes contributions to the Budget Stabilization Fund, or “rainy day fund.”

Transportation funding

As proposed, the state operating budget allocates $3.78 billion to the Illinois Department of Transportation (IDOT) in FY23 — an increase of about $59.7 million or 1.6 percent compared to $3.72 billion in FY22. While most funding would continue at levels similar to recent years, proposed appropriations for programs that promote safety would increase by over $11 million or 12 percent between FY22 and FY23.

Additionally, funds appropriated to IDOT to cover costs of personnel, benefits, contractual services, and other operations increased from $1.18 billion in FY22 to $1.25 billion in FY23 — an increase of $66.4 million or 5.6 percent. It will continue to be important to ensure IDOT has sufficient staff capacity to manage projects and administer funds as federal and state funding for transportation investments grows. Lastly, an appropriation of $17.6 million to support reduced transit fares in northeastern Illinois continues to fall short of the cost of the program.

IDOT also receives a majority of the appropriations for capital spending in the proposed budget. The governor proposed directing $26.7 billion of capital funds to IDOT, or 57.4 percent of the total capital budget. This is a reduction of $1.8 billion or 6.3 percent compared to the $28.5 billion enacted in FY22. However, 70 percent of the $4.1 billion in new capital appropriations is for IDOT’s five-year, multimodal transportation improvement program, funded largely by motor fuel taxes, vehicle registration fees, and federal funds. In FY22, less than 60 percent of the new capital appropriations was for IDOT.

Key projects in the proposed capital budget include:

  • road and bridge improvements along Interstate 55 and Interstate 80, which will support the movement of freight through northeastern Illinois
  • new, energy-efficient rail cars for the Metra and CTA rail systems, as well as upgrades to existing transit lines that will support the new rail cars 
  • nearly $150 million for public port districts, including $21.5 million awarded to support projects at the Illinois International Port District

Motor fuel tax revenues

The governor’s FY23 budget proposal includes a one-year freeze on a statutorily required increase of the motor fuel tax (MFT) rate. In 2019, Rebuild Illinois doubled the base MFT rate to 0.38 cents per gallon, tied future annual increases to inflation, and directed incremental MFT revenues to the Transportation Renewal Fund, which provides funds for state and local transportation investments, as well as to the Regional Transportation Authority. These changes recognized the importance of multimodal projects and provided an ongoing funding source for transit projects in Illinois and the northeastern Illinois region.

The Governor’s Office of Management and Budget estimates the FY23 MFT increase would be equivalent to 2.2 cents per gallon, or $135 million in relinquished revenues. However, given that construction costs continue to grow at a rate exceeding inflation, as shown in the chart below, continuing to index the MFT rate to inflation is critical to ensuring transportation revenues keep pace with transportation costs. If the rate increase would have been 2.2 cents, CMAP analysis indicates that a one-year freeze compounded over time could result in nearly $4.3 billion in lost MFT revenues statewide between 2023 and 2050.

Chart of cumulative percent change in national highway construction costs and motor fuel tax collections in Illinois

Overall, the FY23 budget assumes the MFT will generate $2.5 billion. However, as past CMAP analysis shows, enhanced vehicle fuel efficiency will affect future revenues that rely on motor fuel use alone. The recently enacted Climate and Equitable Jobs Act directs the state to study potential losses in MFT revenue as electric vehicles become more common. Additional steps — such as the implementation of a road usage charge — should be taken to ensure dedicated and sustainable funding for transportation.

Federal infrastructure priorities

The Infrastructure Investment and Jobs Act (IIJA), passed in November 2021, reauthorizes and increases funding for key transportation programs and federal infrastructure priorities. As everyone awaits the passage of a federal appropriations bill that would officially fund IIJA, the governor’s budget proposal is one of the first indications of how federal funds may be used in Illinois.

The state anticipates receiving $15.8 billion to support multimodal transportation investments over the five-year program, including $9.8 billion for highway development, $1.4 billion for bridge replacement and repairs, $4.0 billion for public transportation improvements, and $616.0 million for airport infrastructure development. Additional funding is expected for electric vehicle charging and fueling infrastructure grants. However, the total federal funding from IIJA that will flow to the state is still being evaluated. Therefore, the governor’s FY23 proposed budget includes placeholder values for anticipated resources and infrastructure investments.

Key authorizations for expending the first year of IIJA funds identified in the proposed FY23 budget include $115.1 million to the Illinois Environmental Protection Agency (IEPA) for lead service line replacement loans and planning grants, $100 million to the Department of Commerce and Economic Opportunity for broadband expansion efforts, and $30.2 million to the Department of Innovation and Technology in state and local funding for cybersecurity programming to address risks and threats.

Beyond the purview of IIJA, the FY23 budget proposal also demonstrates a continued focus on climate policy in Illinois. In addition to increased funding and staffing goals for the IEPA, the Illinois Department of Natural Resources (IDNR), and the Illinois Department of Agriculture, the governor proposes to double the level of funding for IDNR’s Open Space Lands Acquisition and Development grants to $56 million, which will help local government agencies acquire and/or develop land for public parks and open space.

Next steps

Following the announcement of Governor Pritzker’s proposal, the Illinois General Assembly has begun to consider the FY23 budget. CMAP will continue to monitor this process and evaluate any changes related to our state legislative policy agenda. Documents prepared by the Governor’s Office of Management and Budget are available online, including the capital budget, operating budget, and an interactive budget review tool.