(Bloomberg) -- Illinois Governor J.B. Pritzker’s administration is asking state agencies to prepare $800 million of budget cuts amid pushback to the Democrat’s proposed tax hikes on some businesses.

“It has become clear that opposition to proposed revenue is significant enough to direct agencies to prepare for the possibility of reductions to proposed spending,” Andy Manar, deputy governor for budget and economy, wrote in a May 8 letter to state agency directors. “The Governor will not sign an unbalanced budget. Therefore, we must prepare to implement a potential balanced budget scenario with $800 million less in available revenue.”

In February, Pritzker proposed a nearly $53 billion budget for the year starting in July that would increase levies on sports betting, extend caps on corporate tax deductions and limit sales tax retailers’ discounts. State lawmakers are expected to vote on the spending plan by May 24, the last day of the current legislative session.

Read more: Illinois Eyes Sports-Betting Tax Hike for Fiscal 2025 Budget

Pritzker and legislative leaders have said they want to boost funding for education, social safety net programs and economic development without hurting the state’s finances. It will be tricky as Illinois is facing the tightest budget in about three years. Revenue growth is slowing and pandemic aid is winding down. 

Members of the Illinois senate’s budget team are still reviewing the revenue-raising proposals.

State Senate President Don Harmon’s “goal for this session is to once again pass a responsible, balanced budget that will continue Illinois’ progress toward a bright financial future,” Elizabeth Mitchell, his spokesperson, said in an email.

Discretionary Spending

The governor’s administration doesn’t know what programs would be impacted if the revenue-raising proposals don’t pass. In his letter, Manar asked agency leaders to focus on grant programs and other discretionary spending that has climbed in recent years. 

The state, once on the brink of being cut to junk, now has a trio of A-level credit ratings. Plus, last month, Moody’s Ratings boosted its outlook to positive from stable, signaling more upgrades are possible.

The rebound comes after the state made higher pension contributions, grew its rainy-day fund, passed consecutive budgets on time and paid down its bill backlog. Still, more than $140 billion of unfunded pension liabilities weigh on its finances, and the two-year budget impasse from 2015 to 2017 hasn’t been forgotten by investors and rating firms. Illinois also remains the lowest-rated state in the US and pays the highest penalty to borrow from the $4 trillion municipal bond market.

“Working with our General Assembly partners, Governor Pritzker remains committed to responsible fiscal management,” Manar said in his letter. “That means signing only a true balanced budget with no increase to the bill payment cycle, no unrealistic revenue forecasts, no skimping on pension contributions, and continued deposits to the State’s Budget Stabilization Fund.”

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