* Subscribers were briefed on this early today. On Monday, I told you that the legislature’s Commission on Government Forecasting and Accountability suspected the dramatic fall-off corporate income tax was tied to tax changes made by the “Big, Beautiful Bill.” The Governor’s Office of Management and Budget now confirms COGFA’s suspicion.

Crain’s…

Just a few months into the new fiscal year, the state of Illinois already has bad budget news.

It expects a $267 million deficit for the fiscal year that ends June 30, in large part because of tax cuts passed by Congress.

The new forecast puts additional pressure on already shaky state finances. Legislators scrambled to balance this year’s $55.1 billion budget with tax-law changes and one-time funding sources. Gov. JB Pritzker already has told state agency leaders to look for ways to hold back spending by 4%.

The Governor’s Office of Management & Budget now forecasts the state’s largest revenue sources — income tax and sales tax — to be $827 million lower this year than previously expected. But that shortfall is offset by other revenue, winnowing the deficit to $267 million.

The deficit for next fiscal year is projected at $2.2 billion. “The Governor’s Fiscal Year 2027 Introduced Budget will address this gap,” the report states.

* From the press release…

Through the first quarter of fiscal year 2026, several state revenue sources have performed stronger than expected, but GOMB projects that H.R. 1’s negative impact on business tax collections will outweigh these gains. General Funds revenues are now projected to be net $449 million lower than earlier estimates due to an estimated $830 million reduction in state tax revenue in FY2026 due largely to automatic state tax law conformity with federal corporate tax cuts. Ongoing uncertainty from tariffs, inflation, a weakening labor market, the federal shutdown, and unpredictable actions by the Trump Administration continues to affect the economic outlook. […]

While no state—including Illinois—can fully backfill federal cuts, Gov. Pritzker remains committed to mitigating their impact where possible and doubling down of fiscal responsibility. Earlier this month, he directed state agencies to reserve up to 4% of FY2026 General Funds appropriations to help offset the effects of Trump’s harmful economic policies while maintaining core services. To further protect the state, Gov. Pritzker and the General Assembly approved tools in the FY2026 Budget —including expanded Comptroller and Treasurer authorities and the creation of the BRIDGE Fund—to manage operations and programs during federal uncertainty and address short-term revenue shortfalls. These measures will enable Illinois to respond quickly to delayed federal funding and other unexpected economic pressures from the Trump Administration.

* The full report is here. Go to page 11 for more details. The walk-down is on page 15.