CAPITOL NEWS ILLINOIS PHOTO BY ANDREW CAMPBELL
Sen. Elgie Sims, D-Chicago, speaks to Capitol Information Illinois in regards to the standing of state funds negotiations.
Gov. JB Pritzker’s workplace is now projecting state revenues to return in a couple of half-billion {dollars} under the baseline projections assumed throughout his February funds deal with.
The newest downward revision comes as lawmakers are getting into the ultimate two-week stretch to approve a funds earlier than their Might 31 deadline amid rising financial uncertainty.
Whereas Pritzker’s workplace blamed adjustments made by the Trump administration for income shortfalls, the brand new fiscal actuality is nearly sure to make passing a funds harder as lawmakers are pressured to think about approving new income streams or chopping state applications to make up the distinction.
The Governor’s Workplace of Administration and Price range lowered revenue projections for fiscal 12 months 2026, which begins July 1, by $536 million from its February estimate. It’s a 1% lower that places the state on observe to complete FY26 with $54.9 billion in income.
The change “is basically pushed by the financial uncertainty and nervousness fueled by the Trump Administration and Republicans in Congress,” Deputy Gov. Andy Manar mentioned in an announcement.
“Their reckless financial insurance policies have already triggered the primary quarterly decline within the nation’s Gross Home Product (GDP) in three years and are driving up prices for working households,” Manar added. “This rising nationwide instability poses a critical threat to Illinois’ continued financial progress and outlook.”
Revenue tax, federal funding adjustments
Projections for revenue and gross sales tax income in FY26 have been lowered by 1% since February whereas company revenue tax expectations decreased by practically 7%.
GOMB’s projection extra carefully aligns with a revision issued earlier this month by the Fee on Authorities Forecasting and Accountability, the Normal Meeting’s bipartisan forecasting fee. COGFA’s Might 2 forecast initiatives FY26 will see $54.5 billion in income, in comparison with the $54.9 billion forecast by GOMB.
The roughly $400 million distinction between COGFA’s and GOMB’s is pushed by the truth that GOMB’s newest estimate consists of tax code adjustments sought by the governor that can elevate income past what’s in present legislation. Pritzker proposed a tax enhance on digital playing and desk video games at casinos, pausing a switch of gross sales tax income from motor gasoline gross sales to the street fund, and offering non permanent amnesty for people making delinquent tax funds.
Pritzker’s workplace decreased federal income expectations for FY26 by about 2%, however COGFA lowered expectations by greater than 6%.
Pritzker in February proposed a $55.2 billion spending plan that may be fueled by $55.5 billion in income, together with the proposed income adjustments. However now lawmakers should work to suit their spending priorities right into a smaller window that was already tight. Pritzker’s launched funds referred to as for 1% spending development in most areas of the funds exterior training, pensions and well being care prices.
Senate Democrats’ funds chief, Sen. Elgie Sims, D-Chicago, mentioned he believes the governor’s workplace’s adjustment retains with its latest custom of “accountable and conservative income estimating” and that Pritzker was not too aggressive when he launched his funds in February.
“It was wanting on the info obtainable on the time,” Sims mentioned in an interview. “He made an adjustment name. After having extra actual information, he modified the estimate to replicate that.”
Home Republicans’ funds chief, Rep. Amy Elik, R-Godfrey, mentioned Pritzker’s adjustment was “wise,” however he ought to have been conscious of President Donald Trump’s plans and accounted for his or her results when he launched his funds. She added the state funds has additionally relied an excessive amount of on federal funds to pay for state applications.
“We are actually in a state of affairs the place we now have a lot reliance on the federal authorities that any little reduce seems like a really massive deal to Illinois,” Elik mentioned in an interview.
Particular session wanted?
The Trump administration has made the budgeting course of “rather more troublesome,” Sims mentioned, and it’s doable lawmakers might want to come again later this 12 months to make adjustments to any funds handed this month.
“We do not know what the federal authorities goes to do,” Sims mentioned. “That is probably the most uncertainty we’ve had in a really very long time. So it’s doable. Is it the popular final result? Completely not, however is it a chance? Positive.”
Each Sims and Elik mentioned lawmakers must look carefully at what the state is spending to make choices about learn how to steadiness the funds with minimal income development and with out hurting key companies.
“We’re each line,” Sims mentioned. “That is that time of the session the place we collect info.”
Some Republicans are searching for to slash vital parts of the state funds. Rep. Jed Davis, R-Newark, a member of the far-right Freedom Caucus, suggested the budget could be reduced by $10 billion, however a lot of his suggestions get rid of capital initiatives that aren’t a part of the $55 billion normal fund funds. He additionally instructed lowering pension contributions which might be required by legislation.
Elik was extra measured when discussing potential cuts.
“You may’t simply do an across-the-board discount of state spending,” she mentioned. “I wouldn’t suggest that in any approach. So I feel you go division by division and line by line.”
Projections for the present FY25 funds that ends June 30 stay largely consistent with expectations on the income finish, though spending has outpaced revenues.
Each COGFA and GOMB count on the state will shut the 12 months with $53.9 billion in income, although company and gross sales tax revenue will finish barely decrease than anticipated.
Spending for the 12 months is to this point trending 4% increased than what lawmakers budgeted for, based on GOMB, however practically all of this comes from higher-than-expected pension funds. Just lately enacted state legislation permits the comptroller to “pre-pay” pensions, which means the comptroller could make pension funds earlier within the fiscal 12 months. Usually talking, which means spending may fall extra consistent with revenues because the fiscal 12 months progresses.
Additional cuts from Congress?
Congressional funds talks happening this month may imply additional cuts to federal funding for the state.
Congress is contemplating a plan that features some substantial cuts to Medicaid and federal well being care applications, together with a ten% reduce to the federal matching fee for states that present well being care protection for undocumented immigrants.
Pritzker proposed eliminating a well being care program for noncitizens ages 42-64 to avoid wasting the state $330 million in FY26, however a $132 million program overlaying seniors remained in his proposal.
Pritzker has lengthy warned the state won’t be able to make up for any vital Medicaid cuts accredited by Congress.
“The Governor has made it clear: he’ll solely signal a balanced funds,” Manar mentioned. “On the identical time, he has warned of the devastating affect on working households if Trump and Congressional Republicans succeed of their merciless cuts (to) Medicaid, SNAP, and different crucial security internet applications.”
Capitol Information Illinois is a nonprofit, nonpartisan information service that distributes state authorities protection to tons of of stories shops statewide. It’s funded primarily by the Illinois Press Basis and the Robert R. McCormick Basis.
