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* My weekly syndicated newspaper column…
I spent some time talking with a top legislative budget negotiator last week who said rank-and-file legislators will very soon have to come to terms with a state budget environment unlike anything many have ever seen before.
The “budgeteer” didn’t know yet how things would shake out, but the person was adamant that weak revenues combined with total uncertainty from both the federal government and in the national economy meant the new state budget should most definitely not be overloaded with spending.
Statehouse types talk about “budget pressures” every year around this time. It’s second nature for legislators and interest groups to propose more spending, regardless of what the revenue situation looks like.
Public employee unions are pushing for the most spending, and at the top of their list is a proposal to spend $30 billion during the next 20 years to bolster pensions for their members.
The teachers want a $200 million annual increase in the K-12 Evidence-Based Funding program, above the current $350 million hike. And there’s a proposal to spend about $1.7 billion in the coming years to increase funding for higher education, a similar plan to the K-12 EBF model.
Everywhere you look, somebody wants $10 million more a year, or $20 million, or $60 million or whatever for their programs.
Nobody is really wrong. In some cases, small and even large increases beyond what the governor’s proposed budget contains are very much needed. There’s also little doubt that a strengthened K-12 EBF program would help tamp down property taxes, and more money for higher ed could keep tuition from rising even faster.
But, as the governor said in his February budget address, state-sourced (non-federal) revenues grew by 15.9% in Fiscal Year 2021 and 13.2% in FY2022. “We expect to finish this year with 5% revenue growth,” Gov. JB Pritzker said at the time. “For 2026, our forecast projects a 1.9% increase.”
While that’s tiny, Pritzker’s FY26 revenue projection was still $712 million above what the legislature’s Commission on Government Forecasting and Accountability originally predicted.
The commission did revise its revenue estimates upward not long ago. But next fiscal year’s forecast is still significantly below the governor’s budget forecast.
The new commission revenue prediction for the coming fiscal year, which begins July 1, was revised up by $266 million, which is a lot of money, but only represents a half-percentage-point increase.
But that more generous estimate is still $471 million below the governor’s base revenue forecast. The governor added about $500 million on top of that with his proposed changes to existing laws.
As a percent of the overall budget, they’re not far apart. But the $471 million difference is still real money and not easily dealt with, particularly since the governor claimed in February to have proposed increasing state discretionary spending by less than 1%.
The federal government is a very big reason why the new commission estimate wasn’t as high as some had hoped. Federal revenues will fall by $270 million in the coming fiscal year, or 6%.
During the current fiscal year, which ends June 30, federal revenues are projected to drop by $347 million, or 8.5%, compared to the revenue estimate issued just a couple of months ago in March.
Both of those projections could be on the low side, depending on what the courts and the Republican-controlled Congress approve.
Combining both state and federal revenues, the Commission on Government Forecasting and Accountability says this fiscal year should see a $317 million revenue increase, due mainly to tax returns filed in April, which is a positive reflection on last year’s economy.
But going forward, the party’s over.
Even some Republicans are warning the economy under President Donald Trump could very well drag down state revenues.
State Rep. C.D. Davidsmeyer, R-Murrayville, told reporters late last month the increases in capital gains taxes during President Joe Biden’s last year in office “are not sustainable” going forward, according to Capitol News Illinois.
And Davidsmeyer said of Fiscal Year 2027: “I think it’s going to be an even worse look.” He also pointed out that Illinois growth often lags other states, which will compound the problem.
The legislative leaders and the governor can decide to use either the legislature’s forecast or the governor’s forecast or somewhere in between.
But considering we don’t yet know what impact the next federal budget and other presidential actions could have on the state’s finances and its economy, choosing the most conservative outlook would most definitely be the prudent path.
posted by Rich Miller
Monday, May 12, 25 @ 9:34 am
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Sometimes you need a “Velvet Hammer” to say no, when budget restraint is required. We’re in for 4 horrible years under a crazy corrupt President. JB, Harmon and Welch will need to get it together to ensure IL responds to the threat in a responsible manner.
Comment by Norseman Monday, May 12, 25 @ 10:00 am
@Norseman +1
Comment by JS Mill Monday, May 12, 25 @ 10:01 am
Gov. J.B. Pritzker told reporters Illinois will not rely on raising taxes or be hiking pension benefits in his upcoming 2026 state budget.
When do the behind the curtain tax increases proposals become public…..last week of the session….?
Comment by It's always Sunny in Illinois Monday, May 12, 25 @ 10:03 am
“choosing the most conservative outlook would most definitely be the prudent path.
Not sure that phrase is actually in the GA’s vernacular
Comment by Frida's Boss Monday, May 12, 25 @ 10:30 am
Tier 2 pension enhancements are more of a long game plan anyway. They could go another 10-20 years before the bulk of any enhanced benefit would be derived.
Comment by City Zen Monday, May 12, 25 @ 10:49 am
Lucky we’ve got a balanced budget amendment in our state constitution. /s/
Incredible to realize that if Illinois took in the projected revenue for this year, while spending at 2019 levels, we’d have a $15 billion surplus.
Comment by Downstate Monday, May 12, 25 @ 10:57 am
“When do the behind the curtain tax increases proposals … .”
As long as the General Funds rely, in part, on “per unit” taxes (alcohol, cigarettes, marijuana, etc.), in non-extraordinary revenue years tax increases will be a hardy perennial.
Comment by Anyone Remember Monday, May 12, 25 @ 11:11 am
@Downstate: I think a lot of us would love to have our spending at 2019 levels, but the cumulative inflation since then is 23%. Might as well demand gas still cost 89 cents and a can of pop cost a quarter.
Comment by Benjamin Monday, May 12, 25 @ 11:13 am
Benjamin,
Great point! But, indexed for inflation, we’d still have a $7 billion surplus.
Comment by Downstate Monday, May 12, 25 @ 11:21 am
=== Incredible to realize that if Illinois took in the projected revenue for this year, while spending at 2019 levels, we’d have a $15 billion surplus. ===
But keeping spending at 2019 levels doesn’t make sense. Inflation since 2019 has brought the costs of goods and services way up. Your expenses would rise even without any new programs. I wish my expenses from 2019 would have remained the same, but they have not.
Comment by Remember the Alamo II Monday, May 12, 25 @ 11:22 am
=I think a lot of us would love to have our spending at 2019 levels, but the cumulative inflation since then is 23%. Might as well demand gas still cost 89 cents and a can of pop cost a quarter.=
That sounds more like 1989 levels.
Comment by Leatherneck Monday, May 12, 25 @ 11:25 am
===we’d still have a $7 billion surplus===
That’s sophomore logic. Taxes were raised to start new programs, or expand programs, or hire desperately needed workers. You wanna stick with the way things were in the first year Rauner hangover? Fine. But stop hiding that while playing with numbers.
Comment by Rich Miller Monday, May 12, 25 @ 11:32 am
I’d love to have my expenses at 2019 levels with my income at today’s 2025 figure. Who wouldn’t?
Comment by low level Monday, May 12, 25 @ 1:27 pm
If you want further growth in state programs, you’ve got to pay for them some way. This isn’t a tax revolt kind of state.
Comment by Steve Monday, May 12, 25 @ 1:29 pm
===This isn’t a tax revolt kind of state. ===
No, it’s a let the tax increase expire a kick yourself repeatedly in the face kind of state.
Comment by Candy Dogood Monday, May 12, 25 @ 1:35 pm
As a lean-right-centrist, I do not agree with the premise that is underlying all of this budgeteering — life improves for everyone when the government spends more money and passes more laws.
There are very few metrics that support that assumption.
Comment by 40,000 ft Monday, May 12, 25 @ 2:26 pm
Illinois needs to grow the tax base. It’s a bit concerning how Springfield isn’t more focused on housing/zoning reform.
Comment by Joseph M Monday, May 12, 25 @ 3:20 pm