What’s Inside Illinois’ Fiscal Year 2023 Budget? ISMS Provides an Overview!

April 22, 2022

For the second straight year, Illinois’ finances look much better than expected going into Fiscal Year 2023. Higher-than-expected post-COVID incoming revenues, along with federal COVID relief funding, are the drivers behind this financial outlook.

Incoming state revenues are $4.6 billion higher for the current fiscal year than previously projected, namely because spending on goods, which Illinois taxes rather than services, grew during the pandemic and because the budget was bolstered with federal stimulus funds.

Additionally, due to the fact that funds are still available from the federal American Rescue Plan Act (ARPA), lawmakers had a surplus of state funds to allocate this year compared to previous budgets requiring cuts.

The Fiscal Year 2023 State budget has been signed into law by Governor Pritzker as Public Act 102-698. The total revenue number for the FY23 State budget is $46 billion.

Here are the highlights of the state budget:

• Suspending the 1% sales tax on groceries for one year, beginning July 1, 2022 (saves consumers $400 million; local governments will still receive revenue);
• Freezes the Motor Fuel Tax at 39 cents/gallon until January 1; will then increase 2.2 cents in 2023 (saves consumers $70 million; retailers also need to place a sign on each gas pump highlighting the tax relief);
• Increases the state Earned Income Tax Credit to 20% of the federal credit, up from 18% ($100 million per year) and expands eligibility to persons 18-25 and 65 or older
• Doubles property tax rebates up to $300;
• Sends $50 checks per individual directly to taxpayers this fall for households earning less than $200,000 individually or $400,000 jointly and $100 per child up to three children (sent to 90% of Illinois families);
• Suspends the state sales tax on back-to-school supplies and clothing August 5-14, 2022 (saves consumers $50 million);
• $236 million for public safety ($124 million for law enforcement grants; $48 million for carjacking prevention; $50 million for domestic violence programs; $12 million for witness protection program and anonymous tip line);
• Deposits $1 billion in the rainy-day fund; and
• Pays another $200 million into pension deficit in addition to the required $9.6 billion payment.

Each year the governor and the General Assembly negotiate a companion substantive initiative called the Budget Implementation Bill (BIMP). This year’s BIMP contained a number of healthcare related provisions that ISMS will continue to monitor over the next year. Here are the provisions:

• Creates the Office of Opioid Settlement Administration in the Department of Human Services;
• Establishes the Pipeline for the Advancement of Healthcare (PATH) Workforce program with community colleges;
• Allows Nursing Education Scholarships to be awarded to students at approved institutions that are not required to meet the definition of “institution of higher learning.”
• Increases Medicaid rates for specialized mental health rehabilitation facilities by 5% to incentivize reduced room occupancy; Medicaid rates for supportive living services must be 54.3% of the average total nursing services per diem rate for geographic areas; increases reimbursements for substance use disorder treatment providers and facilities; reimburses for medical forensic services to sexual assault survivors;
• Waives licensure fees for healthcare workers for Fiscal Years 2022-2024 but allows individuals to benefit from the waiver only once;
• Uses COVID Relief Funds to increase pay for frontline workers at nursing home facilities and ground ambulance service providers;
• Mandates that the Department of Healthcare and Family Services (DHFS) create a Managed Primary Care Demonstration Project to provide primary care services for preventative care in underserved communities with a healthcare organization; and
• Creates a Statewide 9-8-8 Trust Fund for a suicide prevention and mental health crisis system.

The BIMP has been signed into law by Governor Pritzker as Public Act 102-699.

MEDICAID

Medicaid Work Group omnibus bill

The Medicaid Working Group is a bipartisan/bicameral working group that was established to provide a thorough review of Medicaid legislation, rules, and policy. This year the Medicaid Working Group developed an omnibus bill (House Bill 4343) to include provisions from several bills to:

• Stipulate funding for wellness checks for mental health in schools,
• Provide Medicaid payments for midwifery and acupuncture,
• Increase Medicaid payments for behavioral and maternal health services and dental services
• Provide Medicaid coverage for peer recovery support services,
• Launch a certified nursing assistants (CNA) internship program, and
• Provide higher rates for non-emergency ground ambulance services.

The Illinois Department of Healthcare and Family Services (HFS) will seek a State Plan amendment to implement 12 months of continuous eligibility and ex-parte redeterminations for Medicaid recipients. HFS will also investigate how to align Medicare Part D and Medicare Savings Program. In addition, the bill allows emergency rulemaking for providing coverage to noncitizens ages 42 to 54. House Bill 4343 is currently awaiting the governor’s signature.

Medicaid expansion feasibility study

The Medicaid Working Group had met over the summer to discuss the Department of Healthcare and Family Services’ (DHFS) feasibility study on supporting the uninsured and underinsured in Illinois. The study looked at several options, including a single payer plan, Medicaid expansion, and a state-based exchange. The Working Group, however, introduced House Bill 5142 and House Bill 4343 for this session to focus on enrolling those who qualify for Medicaid but are currently under or uninsured into a Medicaid plan. Even though a public option bill was not considered this spring, Governor Pritzker, who had campaigned on bringing a public option to Illinois in his first gubernatorial run, said he is still interested in allowing residents to buy into Medicaid. His administration is observing how other states have implemented the policy.

If you have questions, please contact ISMS Senior Vice President of State Legislative Affairs Erin O'Brien by email.