* Press release…

Today, the Governor’s Office of Management and Budget (GOMB) released the annual Illinois Economic and Fiscal Policy Report, outlining the state’s five-year fiscal outlook and updated projections for fiscal year 2027. ​
While revenues are performing above expectations, the State continues to prepare for federal funding cuts and additional cost pressures under H.R. 1. To help address these pressures, Governor JB Pritzker proposes using a projected one-time fiscal year 2027 surplus to protect core services that help Illinoisans afford everyday necessities and strengthen the state’s long-term fiscal stability.

Revenue Forecast in FY2027

Following stronger revenue performance through the first four months of fiscal year 2027, GOMB has increased its General Funds revenue forecast by $1.079 billion above the enacted budget estimate. After accounting for updated expenditure projections, the state anticipates a $927 million surplus before proposed allocations and supplemental spending needs.

* Before anyone gets too attached to that surplus, a warning from the report…

This surplus is one-time, as out-year projections illustrate the expectation that the State will continue to address budgetary spending pressures that exceed revenue growth. As with surpluses seen in recent years, Illinois will again strategically deploy the funds – such as when surplus funds were used to pay down the bill backlog (reducing interest costs), paying off debts early, making additional payments to fund state pension debts, and setting aside funds for a ‘rainy day.’ Any increases to ongoing base spending will just amplify the additional budgetary pressure in fiscal year 2028 and beyond.

* Back to the press release…

Some recent revenue gains reflect the timing of tax payments, and the stronger-than-expected performance is anticipated to moderate over the remainder of the fiscal year. Corporate income tax collections have been particularly volatile since the passage of H.R. 1, and some recent collections may reflect payments originally expected in fiscal year 2026.

Preparing for Federal Funding Cuts from H.R. 1 and Future Needs

Federal cuts to food assistance and health care threaten to put additional pressure on household budgets while shifting costs onto states. The Governor proposes using the one-time surplus to prepare for future costs and strengthen the state’s ability to help working families, including items such as:

- Food Assistance: Set aside funds to support meeting future state matching requirements for the Supplemental Nutrition Assistance Program (SNAP) ​
Disaster Response: Support Illinois communities facing more frequent severe weather by bolstering state funds amid lack of federal assistance from the Trump Administration
- Emergency Reserves: Replenish the Budget Reserve for Immediate Disbursement and Governmental Emergencies Fund (BRIDGE Fund) for unexpected costs the State might incur from the uncertainty created by the Trump Administration
- Bolstering Essential Services: Address potential supplemental budget needs, including additional funding for community programs serving a growing number of older Illinoisans

After accounting for the Governor’s proposed allocations, the fiscal year 2027 surplus is projected to total $199 million.

Maintaining Long-Term Fiscal Stability

This year’s projected surplus provides a one-time opportunity to prepare for future challenges and lower costs for working families. Illinois took a similar approach during and following the COVID-19 pandemic, using stronger-than-expected revenues to pay down outstanding bills and build reserves while maintaining and bolstering essential services. Spending pressures are expected to continue exceeding revenue growth in the years ahead.

Based on current revenue projections and estimated costs, Illinois faces a projected $2.4 billion budget gap for fiscal year 2028. The Governor’s fiscal year 2028 budget proposal in February will address that gap, continuing to double down on the administration’s work to address projected shortfalls through strong fiscal responsibility and leadership.

Under Governor Pritzker’s leadership, Illinois has earned 12 credit rating upgrades, enacted eight consecutive balanced budgets, and grown its Rainy Day Fund to more than $2.5 billion. The Governor remains committed to building on that progress while protecting investments that make education, health care, and everyday necessities more affordable for Illinois working families.

Read the full report here.