State ends fiscal year with record revenue
[July 03, 2025]
By Ben Szalinski
Despite uncertainty over the economy and federal funding during the
second half of fiscal year 2025, the year closed on June 30 with the
state setting a new record for annual revenue.
Numbers compiled by the independent Commission on Government Forecasting
and Accountability show FY25 concluded with $54 billion in revenue, the
most the state has ever received in a fiscal year. The state also
brought in $717 million more in revenue than lawmakers originally
budgeted for when they passed a $53.3 billion budget in May 2024.
All told, the final revenue numbers track closely with projections made
in May by both COGFA and the Governor’s Office of Management and Budget
that formed the basis of the FY26 budget. In other words, June revenues
produced no surprises, and lawmakers aren’t sitting on any substantial
surplus as the new fiscal year begins.
The record revenues also don’t alleviate any uncertainty for the current
or future fiscal years as Congress considers drastic reductions to the
social safety net and aid to states.
Causes of revenue growth
Strong personal income tax growth drove the revenue increase in FY25,
largely thanks to a “true up” conducted by the Department of Revenue
that reallocated business related income tax revenue into the personal
income tax category. Personal income tax revenue was 10% higher than in
FY24, but corporate income taxes declined by 9.5%.
Some other revenue sources also saw minimal growth. Sales tax revenue
grew by less than 1%, though COGFA noted it increased by nearly 3% in
the second half of FY25 after a weak start last summer as gas prices
dropped and people cut back on large purchases amid growing economic
uncertainty.
Federal income was also down 4.6% in FY25, even when excluding one-time
pandemic relief funds the state received in FY24. But in a bright spot
for the state, COGFA found that state revenue sources grew more than
anticipated to offset the $178 million decline in federal revenue.
Despite solid revenue growth this year, questions remain about how well
it will perform in FY26.
“Whether this record will be surpassed in FY 2026 remains to be seen,
though the FY 2026 enacted budget assumes revenues of $55.297 billion –
nearly $1.3 billion above the FY 2025 final total,” COGFA Revenue Manger
Eric Noggle wrote.
Bills paid and money left over
The state also ended the fiscal year with $1.9 billion of cash in the
General Revenue Fund after all bills were paid, according to the
Comptroller Susana Mendoza’s office.
“We work hard each year to pay bills on time, build up the state’s
emergency reserves and stress fiscal discipline, even in these uncertain
times,” Mendoza said in a statement. “My office will strive for
continued improvement in state finances and credit ratings in the new
budget year.”
[to top of second column]
|
The Illinois Capitol is pictured on May 31, 2025, during the final
day of the spring session. (Capitol News Illinois photo by Andrew
Adams)
Mendoza’s office also put $256 million into the “rainy day” fund,
growing it to a balance of $2.5 billion. The fund is expected to grow at
a slower rate in FY26, however, as lawmakers suspended a monthly
transfer that will free up $45 million.
With an extra cash balance to start the new fiscal year, Mendoza said
she plans to pre-pay monthly pension payments for FY26. Lawmakers gave
the comptroller authority last year to make pension payments earlier in
the year rather than on a monthly basis when extra money is available.
“This will enable the systems to plan accordingly and keep additional
dollars in their investment portfolios into the new budget year,”
Mendoza said.
An uncertain future
With good new concluding FY25, attention now turns to FY26, which began
Tuesday, and the vast uncertainty the state faces from budget talks in
Congress and the economic fallout of decisions by the Trump
administration.
Gov. JB Pritzker signed a $55.1 billion spending plan in mid-June that
relies on $55.3 billion in revenue. It’s the largest budget in state
history despite minimal discretionary spending growth, and it relies on
$1.2 billion of tax increases or one-time revenues.
But state lawmakers have left the door open to the possibility that
changes Congress makes to federal funding that requires states to cover
greater portions of government programs and ceases funding in certain
areas will require lawmakers to change the budget.
“The ability of the state to try to step in and try to mitigate the
damage is somewhat limited, although we have the ability to do certain
things and may have to in special session or we may have to in veto
session,” Pritzker told reporters in Peoria on Tuesday. “It’s a little
hard to tell yet. Some of the provisions of this terrible bill in
Washington, D.C. don’t go into effect until next year and so we’ll have
to evaluate what changes to make in order to deal with it.”
Work requirements for health care and food assistance programs, cuts to
Medicaid reimbursements and the elimination of clean energy tax credits
could all require the state to take on more costs.
Capitol News Illinois is
a nonprofit, nonpartisan news service that distributes state government
coverage to hundreds of news outlets statewide. It is funded primarily
by the Illinois Press Foundation and the Robert R. McCormick Foundation.
 |
