“Erratic leadership in Washington has affected our economic outlook, our revenue projections, and even threatened federal funding for our most crucial services.”
The remaining money would go to the state’s general revenue fund.
The budget also increases funding for safety-net hospitals with federal Medicaid funding cuts possible.
The measure, an apparent nod to the uncertainty of federal funding amid ongoing congressional budget negotiations, will come from money swept from other funds.
RELATED | Governor Pritzker threatens to veto any budget containing ‘broad-based’ tax increase SEE ALSO | Supporters of Chicago elected school board worry rushed IL budget could change CPS voting rules
Springfield, Illinois. Illinois Democrats passed a $55 Point 2 billion budget for the upcoming fiscal year late Saturday, bolstering coffers with new taxes on businesses, sports bets, and nicotine products, with little time for public review.
$55.3 billion in revenue, which includes slightly more than $1 billion in new taxes and revenue adjustments, supports the $55.2 billion spending plan.
In the last 48 hours of the legislative session, thousands of pages of legislation were introduced and passed, including the four bills that make up the budget and capital spending plan.
The budget, which contained few cuts, was criticized by Republicans for increasing spending by about 3 percent compared to the current year. It generates roughly $500 million more in fresh revenue than the government does. In February, JB Pritzker suggested a plan to compensate for the drop in base revenues.
The supermajority Democrats’ hardly any time for public review of the massive spending plan and other major bills was another point of frustration for the minority party.
Like we usually do, we’re hurrying through this process. “Let’s conceal this.”. In order to prevent the public from seeing it until it’s too late, let’s conceal it,” Rep. According to R-Machesney Park’s John Cabello.
It was the best budget that Democrats could come up with during a challenging year. They granted control of a new $100 million “emergency” fund to the governor in order to handle any uncertainties resulting from changes in federal policy. They also regularly attacked Republicans in Congress and President Donald Trump with criticism.
House Majority Leader Robyn Gabel, a Democrat from Evanston, stated, “We see the decisions made in Washington right now are neither fiscally nor socially responsible, so I am very pleased to be able to present a balanced budget crafted to be both.”. “Our revenue forecasts, economic outlook, and even federal funding for our most important services have all been impacted by Washington’s careless leadership. “.”.
Despite the fact that the measure did not increase or create new sales, income, or service taxes, the GOP also criticized the tax increases.
Rather, the measures increase tobacco, vape, and sports gambling tax rates, broaden state taxes on businesses’ foreign and out-of-state income, and drain fund balances from a number of lesser-known and underutilized state funds.
The House passed Senate Bill 2510, a spending bill, 75-41 shortly before 10 p.m. M. Around 11:30 p.m., the Senate passed. A. by a vote of 34–23. Only Democratic votes were needed for the revenue and tax changes (House Bill 2755) and the budget implementation bill (House Bill 1075) to pass with relative ease prior to the midnight deadline set by the constitution. Gov. JB Pritzker declared in a statement that he would sign it.
Another round of tax hikes that were part of a bill to overhaul transit governance came to light late but sputtered. The failed measure would have taxed electric vehicle charging throughout the state and imposed a $1.50 fee on food and package deliveries, among other changes. The bill’s discussions may pick back up later this year.
new levies on deliveries, gaming, and vaping.
A tax of 25 cents per wager is imposed by the revenue bill on the first 20,000 wagers that a sports betting licensee accepts, and then it increases to 50 cents per wager.
Additionally, tobacco products will be subject to new taxes for consumers. The tax rate will increase from 36% to 45%. The tax would now also apply to nicotine pouches and vape products.
Instead of only taxing sales from companies that have a physical presence in Illinois, the revenue plan changes state law to tax sales from all companies that conduct business in the state. A “safe harbor” exemption for companies that transfer funds outside the state is also being eliminated by the plan.
The state’s corporate income tax would also apply to companies that transfer their profits abroad. Illinois would tax the other half of income transferred offshore under the revenue plan, while the federal government currently taxes the other half.
Even if a business is not physically located in Illinois, it is still required to collect Illinois sales taxes from businesses outside the state that sell $100,000 or more to residents of the state. This would apply to companies such as Amazon.
The senator stated, “I will not support this betrayal of hard-working Illinoisans.”. DeWitte, Don R-St. “Charles,” said. “And you will also vote no if you genuinely represent the people who sent you here and if you care about them. Enough is enough. This body should now support taxpayers rather than oppose them. “.”.
A delinquent tax payment incentive program that helps the state recover past-due tax payments is another source of new revenue. It will bring in $228 million, Representative. Chicago Democrat Will Guzzardi said.
According to the governor’s office, the state would also halt the final transfer of motor fuel sales tax revenue to the road fund to free up $171 million.
Pharmacy benefit managers would be charged a fee based on the number of patients they insure under a different bill aimed at reducing the cost of prescription drugs. The proceeds from that charge would be used to create a fund that would allow the Department of Commerce and Economic Opportunity to grant up to $25 million annually to independent pharmacies and pharmacies in rural areas. It would be deposited into the general revenue fund of the state.
Additionally, the measure exempts short-term rentals like Airbnb and VRBO from the state’s Hotel Operators’ Occupation Tax.
health cuts for immigrants.
More than 30,000 noncitizens between the ages of 42 and 64 are covered by a contentious program that will be discontinued in FY26. A program worth $110 million for seniors will continue, but the state will save $330 million by eliminating the program.
An audit released in February found that the combined costs of the two programs have cost the state at least $16 billion, far more than the program’s budgeted amount.
“We had to make some difficult choices in this case. We had to make some difficult decisions because that program expanded more quickly and financially than we had anticipated,” Gabel said.
The budget allots $40 million to Federally Qualified Health Centers. People with low incomes and no insurance can receive health services from the centers. Democrats claimed that the increase would be used to treat immigrants who would have been eligible for the health care program.
Under a congressional proposal that would reduce reimbursements for states that offer health insurance to individuals who are in the country illegally, Illinois still faces the possibility of losing some Medicaid funding. However, Gabel pointed out that those cuts might not occur until 2027.
The budget also makes it possible to reduce federal Medicaid funding while increasing funding for safety-net hospitals.
spending on education.
An additional $350 million annually is required by the state’s evidence-based funding model for K–12 schools, with some of that money going to a property tax relief fund and the remainder going directly to schools. Democratic leaders say the proposed budget does not include an additional $43 million in property tax relief funds, but it does fully fund the K–12 education portion at $307 million.
Additionally, the Illinois Community College Board would receive $24 million less in funding, primarily as a result of lawmakers cutting back on a workforce development grant that Democratic leaders claimed was not being used to its full potential.
Only a 1% increase in funding would be made to state universities. Even though the majority of other budgetary categories would have seen increases of 1%, Pritzker suggested a 3% increase for higher education. The leader of the Senate Democrats’ budget, Sen. Chicago Democrat Elgie Sims stated that if significant federal funding is cut, the budget permits an extra 2 percent increase in FY26.
pensions.
Illinois lawmakers failed to address pension reform this spring, despite discussions that lasted more than a year. The “safe harbor” rule of Social Security, which stipulates that pension benefits must be at least equal to Social Security, is probably not being followed by Illinois’ Tier 2 pension system.
The budget package established a new Tier 2 reserve fund that can be used in the event that the “safe harbor” law is broken. This year, lawmakers approved $75 million for the fund, following Pritzker’s suggestion.
Fundraising, “Emergency” fund, and more.
Notably, the “rainy day” fund has not been increased in this year’s budget. Since taking office, the fund has increased to a balance of $2.03 billion, up from less than $60,000, and Pritzker has taken pride in these gains. The FY26 budget would free up $45 million for general fund use by suspending the monthly transfer for a year.
Additionally, the budget package creates a new $100 million fund that the governor may use “in the event of unanticipated delays in or failures of revenues.”. The measure will be financed with money taken from other sources, seemingly acknowledging the uncertainty of federal funding during ongoing congressional budget negotiations.
During a committee hearing, Sims stated, “That will allow us to respond to actions by the federal government and challenges that present themselves and costs that have been diverted from the federal government to the state government.”.
From the general fund, $116 million would go to the attorney general’s office. Attorney General Kwame Raoul, who is pursuing an increasing number of lawsuits against the Trump administration, requested that lawmakers increase funding for his office. Raoul was hoping for funding of $120 million.
Republicans said that referring to the 80-cent hourly wage increase for direct service providers as a funding increase is “sleight of hand,” as the measure would also result in hundreds of thousands fewer hours of work for DSPs. Sen, that renders the increase insignificant. In committee, Chapin Rose, R-Mahomet, said.
“While it’s not a great budget, it’s a good budget and the one we need in this very challenging time,” Rep. The D-Chicago senator Lindsey LaPointe said.
As part of the budget, lawmakers will receive a pay increase, from approximately $92,000 to a base salary of $98,304. That is a legally-mandated annualized rate of increase.
“You allowed yourselves to spend hundreds of millions of dollars of our taxpayers’ money on your pet projects, and you increased our pay,” Rep. “R-Godfrey, Amy Elik, said.”. Consequently, I no longer think you ever intended to exercise financial restraint. “,”.
Funding for the Bears stadium is nonexistent.
The Chicago Bears’ plan to construct a new stadium was not approved by lawmakers. However, the PGA Tour would receive a $1 million grant in conjunction with hosting the 2026 President’s Cup in DuPage County, and NASCAR would receive a $5 million grant ahead of the sport’s third downtown Chicago race in July. During the Senate committee hearing, Republicans criticized those two economic development initiatives.
According to Sims, the budget also includes $200 million to prepare underutilized state properties for future development. Another $300 million that Pritzker had requested for spending on the sale of excess property was taken away by lawmakers.
According to Gabel, the state’s employee management department has also negotiated savings of over $100 million in health care costs.
In addition, recipients who have not received payments in prior years prior to the funding’s expiration in 2026 would receive any remaining federal pandemic relief funds.
And Jade Aubrey helped.
RELATED | Any budget that includes a “broad-based” tax increase faces Governor Pritzker’s veto threat.
SEE ALSO | Chicago elected school board supporters fear that a hastily drafted Illinois budget may alter CPS voting procedures.
