As I write this, Gov. JB Pritzker is preparing to give his annual budget address. It’s an unenviable task.
Earlier this month, the Governor’s Office of Management and Budget released a report showing federal tax cuts caused a $587 million reduction in state revenues this fiscal year.
The governor announced last month that he was withholding $482 million in state spending to help mitigate federal attacks on the state budget.
It’s not all horrible news. The latest monthly revenue report from the Legislature’s Commission on Government Forecasting and Accountability showed January revenues from state sources were up, according to the commission.
Personal income tax receipts increased 2.1% in January compared to the previous January (which is still below inflation). Corporate income tax revenues rose by 3.5% after months of lagging. Gross sales tax revenues increased by 3%.
\Estate tax receipts are up 60%, or about $200 million, so far this fiscal year compared to last year at this time, the commission reported. The commission said asset valuation increases, including the stock market, likely contributed to the increase.
So far this fiscal year, revenues are up a bit more than $1 billion, or 3.5%, compared to the same period in fiscal year 2025.
But there is that big federal downside. According to the Commission on Government Forecasting and Accountability’s report, federal revenues experienced a “notable decline,” falling $169 million, or almost 36% in January, compared to the same month last year.
During the fiscal year to date, federal sources have dropped by about 8%. But January marked the third straight month for federal revenue declines, so it may be accelerating.
“To meet initial fiscal year estimates, Federal Sources will need to show meaningful improvement over the remaining five months,” the monthly report declared. The fiscal year ends June 30.
And nobody knows what tomorrow may bring. Heck, by the time you read this, something new could’ve happened. At any given moment, White House operatives could try to pull funding for whatever program they can dream up.
Last week, the Trump administration announced that it was canceling $100 million for local public health grants in Illinois.
Illinois was one of just four Democratic-led states that were targeted for the cuts.
According to the Illinois Department of Public Health, some of the cuts were for “HIV Prevention and Surveillance, which includes programs to expand HIV testing to cover more people who may not be aware they have HIV; linking newly-diagnosed patients to appropriate care; expanding access to PrEP, medication which can reduce the spread of HIV; and conducting partner notification.”
Attorney General Kwame Raoul quickly won a temporary restraining order last week, giving the state a 14-day reprieve.
Raoul has so far fought off numerous federal attempts to withhold money from the state. But there’s just no way of knowing what could happen as the litigation moves up the federal judicial food chain.
In other words, there is just no way to craft a reliable fiscal plan in this environment.
My associate Isabel Miller wrote a subscribers-only story last week for my newsletter about how more than 40 Democratic members of the Illinois House and Senate have been meeting weekly to come up with a plan to find some government efficiencies and create new revenue streams to help the state meet its obligations.
“We must lean into transforming our tax system and creating sustainable revenue to protect people and the services we all depend on,” the Affordability and Tax Justice Coalition declared in a statement.
I was told that six ideas are under discussion, and four have been introduced into bill form: A digital advertising tax — Senate Bill 3353/House Bill 4894); A billionaire wealth tax (Senate Bill 3376/House Bill 5215); Expanded tax haven reporting (House Bill 5318/Senate Bill 3486) and closing corporate loopholes (Senate Bill 3796/House Bill 5125).
As Isabel noted, House Speaker Emanuel “Chris” Welch has also been promoting a tax on millionaires, which has heartened the progressives.
Sen. Graciela Guzmán, D-Chicago, sits on the coalition’s executive committee.
“I think right now the growing sentiment is ‘Let’s get as much revenue as possible,’” Guzmán told Isabel.
Guzmán also said the coalition is pressing revenue advocates for specifics, including projected revenues for each proposal, constitutionality and implementation.
Too often, these groups just throw together proposals and hope for the best. But Guzmán said they’re focusing on whether these ideas can pass both chambers and be signed into law.
“The roll call is something that we keep talking about every week because we know the votes that we have to get up to in any one of these proposals,” Guzmán told Isabel.
A lot is riding on those efforts.
- Friendly Bob Adams - Tuesday, Feb 17, 26 @ 8:30 am:
Good luck to Pritzker and the GA getting this done. A tough year indeed.
The idea that the federal government can withhold funding based on how a state voted is offensive and unconstitutional. Here’s hoping they can get this overturned.
- Steve - Tuesday, Feb 17, 26 @ 8:52 am:
-‘Let’s get as much revenue as possible,’” -
May isn’t that far way if some are looking for constitutional changes for revenue.
- Soda tax now - Tuesday, Feb 17, 26 @ 10:12 am:
A soda tax in Illinois helps raise revenue and lower healthcare costs
- The Farm Grad - Tuesday, Feb 17, 26 @ 10:36 am:
“A soda tax in Illinois helps raise revenue and lower healthcare costs”
Soda tax is regressive, and would negatively impact income and wealth inequality.
Let’s have the courage to follow Silicon Valley center-left lawmaker, Ro Khanna, who has embraced the Tax on the Wealth of the Oligarchy
- Excitable Boy - Tuesday, Feb 17, 26 @ 10:40 am:
- A soda tax in Illinois helps raise revenue and lower healthcare costs -
You folks didn’t learn your lesson on this? It lasted 3 months in Cook County and you want to try it statewide? Might as well lump it in with the campfire tax and try to lose a few seats.
- No relation - Tuesday, Feb 17, 26 @ 10:45 am:
A soda tax in Illinois helps raise revenue and lower healthcare costs
This may work if the tax was the same as the alcohol tax or higher. From 2020 to 2025 the price of soda nearly doubled and consumption dropped 0.5%. If you want to lower healthcare costs you would need to tax it so people will not buy it which means you are not collecting tax money.
- City Zen - Tuesday, Feb 17, 26 @ 10:57 am:
==A soda tax in Illinois helps raise revenue and lower healthcare costs==
If soda is still SNAP eligible in Illinois, then it’s not subject to any tax. So the target demographic it’s supposed to help (low-income) won’t be motivated to pursue healthier options because they’re not paying the tax.
- Michael McLean - Tuesday, Feb 17, 26 @ 12:17 pm:
Rich folks typically drive big heavy SUVs like Chevy Tahoes. Instead of a flat vehicle registration fee, levy a fee based on the weight of the vehicle like they do in Maryland and Washington D.C.
If you want to promote EVs, then give them a 1,000lb discount.
- Leatherneck - Tuesday, Feb 17, 26 @ 12:25 pm:
=Rich folks typically drive big heavy SUVs like Chevy Tahoes. Instead of a flat vehicle registration fee, levy a fee based on the weight of the vehicle like they do in Maryland and Washington D.C=
Not just the rich drive those things. Almost every state and medical parking lot are overrun by immense trucks and large SUVs. Taking up two spots almost and making it difficult for compact car drivers (like me if you consider a Focus to be a “compact car” as it should be) to find a parking spot safely.
- Harrison - Tuesday, Feb 17, 26 @ 12:31 pm:
Not sure how you know how much someone earns based on the weight of their vehicle, but Illinois already charges a graduated higher registration fee based on the weight of your vehicle.
This is because a heavier vehicle is harder on the roads.
- Rich Miller - Tuesday, Feb 17, 26 @ 2:16 pm:
===This is because a heavier vehicle is harder on the roads. ===
Roads are built to withstand semi trucks. A pickup ain’t no thang.
- Perrid - Tuesday, Feb 17, 26 @ 3:02 pm:
I think replacing the estate tax with a law that basically counts all unrealized gains as realized upon any change of ownership would be a positive change, it’d actually go after the uber wealthy who don’t need any income, and probably less distortionary than a wealth tax where every bit of property has to be assessed every year. Just my two cents.
- Ducky - Tuesday, Feb 17, 26 @ 3:16 pm:
The quotes from this article are appalling as a resident. I have no faith that the revenues will be used appropriately since the apparent focus is only on preserving the dysfunctional status quo. The only new revenues should be for pensions, paying them down sooner, and said revenues should expire once we get to that point.
- Rich Miller - Tuesday, Feb 17, 26 @ 3:17 pm:
===The only new revenues should be for pensions===
You ain’t finding 60-30-1 for that.
- Ducky - Tuesday, Feb 17, 26 @ 3:19 pm:
Shrug. I will keep voting for what needs to happen regardless.
- Rich Miller - Tuesday, Feb 17, 26 @ 3:20 pm:
=== I will keep voting for what needs to happen regardless===
Might wanna get elected first. Because you’re not gonna find a candidate who supports massive tax hikes solely to fund pensions now that state pension payments have leveled off for years.
- Just Me 2 - Tuesday, Feb 17, 26 @ 8:45 pm:
===I think right now the growing sentiment is ‘Let’s get as much revenue as possible===
That attitude is the problem, and is quite frankly offensive.