Governor’s office cuts revenue projection by $500M in latest downward
estimate
[May 15, 2025]
By Ben Szalinski
SPRINGFIELD — Gov. JB Pritzker’s office is now projecting state revenues
to come in about a half-billion dollars below the baseline projections
assumed during his February budget address.
The latest downward revision comes as lawmakers are entering the final
two-week stretch to approve a budget before their May 31 deadline amid
increasing economic uncertainty.
While Pritzker’s office blamed changes made by the Trump administration
for revenue shortfalls, the new fiscal reality is almost certain to make
passing a budget more difficult as lawmakers are forced to consider
approving new revenue streams or cutting state programs to make up the
difference.
The Governor’s Office of Management and Budget lowered revenue
projections for fiscal year 2026, which begins July 1, by $536 million
from its February estimate. It’s a 1% decrease that puts the state on
track to finish FY26 with $54.9 billion in revenue.
The change “is largely driven by the economic uncertainty and anxiety
fueled by the Trump Administration and Republicans in Congress,” Deputy
Gov. Andy Manar said in a statement.
“Their reckless economic policies have already triggered the first
quarterly decline in the nation’s Gross Domestic Product (GDP) in three
years and are driving up costs for working families,” Manar added. “This
growing national instability poses a serious risk to Illinois’ continued
economic progress and outlook.”
Income tax, federal funding changes
Projections for income and sales tax revenue in FY26 were lowered by 1%
since February while corporate income tax expectations decreased by
nearly 7%.
GOMB’s projection more closely aligns with a revision issued earlier
this month by the Commission on Government Forecasting and
Accountability, the General Assembly’s bipartisan forecasting
commission. COGFA’s May 2 forecast projects FY26 will see $54.5 billion
in revenue, compared to the $54.9 billion forecast by GOMB.
The roughly $400 million difference between COGFA’s and GOMB’s is driven
by the fact that GOMB’s latest estimate includes tax code changes sought
by the governor that will raise revenue beyond what’s in current law.
Pritzker proposed a tax increase on electronic gambling and table games
at casinos, pausing a transfer of sales tax revenue from motor fuel
sales to the road fund, and providing temporary amnesty for individuals
making delinquent tax payments.
Pritzker’s office decreased federal revenue expectations for FY26 by
about 2%, but COGFA lowered expectations by more than 6%.
Pritzker in February proposed a $55.2 billion spending plan that would
be fueled by $55.5 billion in revenue, including the proposed revenue
changes. But now lawmakers must work to fit their spending priorities
into a smaller window that was already tight. Pritzker’s introduced
budget called for 1% spending growth in most areas of the budget outside
education, pensions and health care costs.
Senate Democrats’ budget leader, Sen. Elgie Sims, D-Chicago, said he
believes the governor’s office’s adjustment keeps with its recent
tradition of “responsible and conservative revenue estimating” and that
Pritzker was not too aggressive when he introduced his budget in
February.
“It was looking at the information available at the time,” Sims said in
an interview. “He made an adjustment call. After having more real data,
he changed the estimate to reflect that.”
House Republicans’ budget leader, Rep. Amy Elik, R-Godfrey, said
Pritzker’s adjustment was “sensible,” but he should have been aware of
President Donald Trump’s plans and accounted for their effects when he
introduced his budget. She added the state budget has also relied too
much on federal funds to pay for state programs.
“We are now in a situation where we have so much reliance on the federal
government that any little cut feels like a very big deal to Illinois,”
Elik said in an interview.
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Sen. Elgie Sims, D-Chicago, speaks to Capitol News Illinois about
the status of state budget negotiations. (Capitol News Illinois
photo by Andrew Campbell)
Special session needed?
The Trump administration has made the budgeting process “much more
difficult,” Sims said, and it is possible lawmakers will need to come
back later this year to make changes to any budget passed this month.
“We have no idea what the federal government is going to do,” Sims said.
“This is the most uncertainty we’ve had in a very long time. So it’s
possible. Is it the preferred outcome? Absolutely not, but is it a
possibility? Sure.”
Both Sims and Elik said lawmakers need to look closely at what the state
is spending to make decisions about how to balance the budget with
minimal revenue growth and without hurting key services.
“We’re looking at every line,” Sims said. “This is that point of the
session where we gather information.”
Some Republicans are seeking to slash significant portions of the state
budget. Rep. Jed Davis, R-Newark, a member of the far-right Freedom
Caucus, suggested the budget could be reduced by $10 billion, but many
of his recommendations eliminate capital projects that are not part of
the $55 billion general fund budget. He also suggested reducing pension
contributions that are required by law.
Elik was more measured when discussing potential cuts.
“You can’t just do an across-the-board reduction of state spending,” she
said. “I wouldn’t recommend that in any way. So I think you go
department by department and line by line.”
Projections for the current FY25 budget that ends June 30 remain largely
in line with expectations on the revenue end, although spending has
outpaced revenues.
Both COGFA and GOMB expect the state will close the year with $53.9
billion in revenue, though corporate and sales tax income will end
slightly lower than expected.
Spending for the year is so far trending 4% higher than what lawmakers
budgeted for, according to GOMB, but nearly all of this comes from
higher-than-expected pension payments. Recently enacted state law allows
the comptroller to “pre-pay” pensions, meaning the comptroller can make
pension payments earlier in the fiscal year. Generally speaking, that
means spending could fall more in line with revenues as the fiscal year
progresses.
Further cuts from Congress?
Congressional budget talks taking place this month could mean further
cuts to federal funding for the state.
Congress is considering a plan that includes some substantial cuts to
Medicaid and federal health care programs, including a 10% cut to the
federal matching rate for states that provide health care coverage for
undocumented immigrants.
Pritzker proposed eliminating a health care program for noncitizens ages
42-64 to save the state $330 million in FY26, but a $132 million program
covering seniors remained in his proposal.
Pritzker has long warned the state will not be able to make up for any
significant Medicaid cuts approved by Congress.
“The Governor has made it clear: he will only sign a balanced budget,”
Manar said. “At the same time, he has warned of the devastating impact
on working families if Trump and Congressional Republicans succeed in
their cruel cuts (to) Medicaid, SNAP, and other critical safety net
programs.”
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