On Wednesday, a joint session of the Illinois General Assembly convened to hear Governor JB Pritzker present his eighth Budget and State of the State Address. Characterizing his fiscal proposal as a “maintenance budget”– it accounts for only a 0.5% increase in discretionary spending over FY26– Pritzker emphasized that the uncertainty in the state’s fiscal picture made the FY27 approach a well-reasoned one.
The Governor acknowledged the difficulties in crafting this particular budget and encouraged legislators to exercise restraint in the budget process. The state’s chief executive told legislators that the budget levels off and, in some cases, reduces programs important to him, signaling legislators should be willing to sacrifice projects important to them as well.
Now seeking his third term as Governor, Pritzker has an increasing national profile and is not bashful about his dislike for President Trump. Pritzker directly blamed the President for the loss of $8.4 billion in funding to Illinois, exhorting Republican legislators to “demand the return of the money and resources this President has taken from the people of Illinois.”
Saying everything is “too expensive”, the Governor cited a number of new proposals aimed at addressing affordability for families, like banning junk fees, making homeowners’ insurance policies more affordable, addressing rising energy costs, building more affordable housing, and easing the path toward and cost of college degrees.
Pritzker cautioned that Illinois’ budget position would be worse if not for his administration’s prudent fiscal management. Since Pritzker took office, Illinois’ bill backlog (which stood at $8 billion when Pritzker took office) is now current, the Rainy Day Fund has grown to $2.4 billion, Illinois has received 10 credit upgrades, the Pension Fund ratio has grown to 47.9%, and Illinois’ Gross Domestic Product stands at $1.216 trillion.
Governor’s Proposed FY 27 Budget: Pritzker proposed a $131.8 billion FY 27 all-funds budget. General funds spending of $56.032 billion is proposed, representing an increase of $982 million over FY 26. The Governor’s budget proposal also projects a $24 million budgetary surplus. The Governor is also requesting a spring supplemental appropriation of $1.335 billion for FY 26, including $2 million in GRF.
Three areas account for 75% of the FY27 increase: mandatory spending for the K-12 Evidence-Based Funding Formula ($305 million); base pension expenditures ($192 million); and medical expenditures at CMS ($269 million). Absent these categories, said GOMB, the spending would increase by less than 0.5%. The Governor laid out other funding priorities, citing early childhood education and childcare; K – 12 and higher education; health and human services; public safety and violence prevention; growing the economy and modernizing business development; and environmental, natural, and cultural resources.
Revenue: The FY 27 proposed budget assumes $56.055 billion in revenue, up $830 million (1.5%) from revised FY 26 estimates. The revenue forecast for the current fiscal year was also revised to $55.228 billion — $399 million above what was forecast in October 2025.
The proposal assumes base revenue growth in state sources of $1 billion above the preliminary October 2025 estimate. Individual Income tax collections are forecast to increase $946 million, or 3.3%, from FY 26. Federal funds are forecast to total $4.071 billion, a $55 million (1.4%) increase from FY 26, primarily due to Medicaid spending reimbursements.
The budget proposal relies on new revenue from:
· Realigning the tax treatment for tables and electronic games at 15 of the 16 Illinois casinos (excluding the Chicago casino) ($120 million)
· Enacting a Social Media Platform Fee for larger social media companies that collect consumer data and sell to third-party buyers. Funds would be “dedicated to education” although it remains unclear how those funds would be used ($200 million)
· Adjusting the Net Operating Loss Deduction Cap sunset to a phased-in approach ($269 million)
· As a one-time transfer, redirecting sales tax revenue from the sale of candy/soft drinks/grooming products from the Capital Projects Fund to General Funds ($79 million)
· Reducing the LGDF distribution percentage from 6.47% to 6.28% ($60 million)
Note: all proposed revenue enhancements will require approval of the General Assembly.
The Governor closed the projected $2.2 billion FY27 budget gap through revised revenue forecasts, spending cuts, and proposed new revenue sources. However, the new budget anticipates over $800 million less in revenue from three areas:
· Interest on state funds and investments is expected to decrease by $158 million from current estimates.
· Inheritance tax receipts are projected to drop $189 million, returning to levels seen in fiscal years 24/25.
· The Income Tax Refund Fund faces the largest decline, dropping $550 million from the current estimate.
Early Childhood Education: FY27 would be the first full year of operational programmatic funding for the Department of Early Childhood, a newly created agency. Pritzker is requesting $4.424 billion All Funds/$2,088 billion GRF for the agency. Highlights include Early Childhood Block Grants ($748 million), Early Childhood Workforce Compensation Grants ($200 million), Child Care Assistance Program ($55 million; to serve an additional 155,000 children), the Dolly Parton Imagination Library ($2.3 million for continuation and expansion), and early Intervention services ($15 million).
K – 12 Education: As proposed, the FY27 budget directs $15.21 billion All Funds/$10.721 billion GRF to the Illinois State Board of Education. Among the priorities: a $305 million increase for the Evidence-Based Funding Formula; a $51 million increase for school categorical grants, the full funding of the Special Education-Orphanage Tuition and Regular Orphanage budget lines, increases in Special Education Transportation reimbursements by $20 million, Special Education Tuition by $20 million, Regular/Vocational Transportation expenses by $10 million, as well as $35 million at IDOT to support mass transit costs related to student transportation. Other aspects of the budget are the maintenance of career and technical education programs to expand access to underserved students, and $1.5 million to implement the Illinois Comprehensive Literacy and Numeracy Plans. FY27 will also fund the fourth-year Teacher Vacancy Grant Pilot Program ($15 million) and the Computer Science Equity Grant Program ($1.5 million).
Higher Education: The Governor proposes continued investment in higher education through allocating $721.6 million to maintain the MAP program and offering an additional $16 million (1% increase) for the operating costs of public universities ($13 million) and community colleges ($3 million). Other features of Pritzker’s FY27 plan include a continuation of funding to support community college investments in dual-credit and not-credit workforce grant programs, continued funding for the Diversifying Higher Education Faculty in Illinois ($2 million); support for Common App simplified admissions ($3 million), and continued Early Childhood Access Consortium for Equity scholarships ($5 million) as well as Golden Apple Scholars ($10.75 million) and Golden Apple Accelerators ($2.5 million).
Healthcare and Family Services: The proposed budget appropriates $47.449 billion All Funds/$8.781 billion GRF to the Department of Healthcare and Family Services. Highlights include:
· An estimated $30.6 billion ($1.4 billion or 4.7% increase) in general revenue and related funds liability associated with medical assistance to 3.1 million Illinoisians, including:
o Approximately 1.45 million children
o More than 498,000 seniors and adults with disabilities
o Almost 445,000 non-disabled adults
o More than 697,000 adults eligible through the Affordable Care Act
· $39 million to implement the Tailored Case Management Program beginning January 1, 2027. (This initiative replaces the DHS Comprehensive Class Member Transition Program and Community Transitions.)
· $14.5 million for the Healthcare Transformation 1115 Waiver, which focuses on infrastructure and limited housing services.
· $300 million in federal funds for efforts to support the new Rural Health Transformation program, which supports rural providers and residents.
· $143.6 million for the Health Benefits for Immigrant Seniors Program. Of this, $110 million is allocated from the state’s general fund, which is held flat to FY 26.
· Continued funding for the statewide Medical Debt Relief Program, which has erased over $1.1 billion of medical debt for over 500,000 residents since its inception.
Human Services: The Governor’s budget proposal allocates $10.609 billion All Funds/$6.938 billion GRF to the Department of Human Services. That appropriation would allow not only for the hiring of an additional 450 staff but also for the updating of eligibility determination systems for the SNAP program and Medicaid to comply with recent changes to federal law ($50 million). Other highlights include: $253.7 million the for Home Illinois Program, $97 million for the Home Services Program; an additional $17.8 million to support the Williams and Colbert consent decree members in transitioning to the community, $34 million additional to phase in the opening of more mental health forensic beds at the Alton Mental Health Center, and $111 million to maintain funding for services for the Reimagine Public Safety to help reduce gun violence.
The budget proposal also allocates $33.9 million for new Ligas Consent Decree placements, $24 million for a $.60/hour Direct Service Provider raise (starting January 1, 2027), $37.5 million to implement the “Zero-Hour” staffing model, and $20 million for ongoing transformation of state-run development centers.
Children and Family Services: The Governor’s budget proposes $2.491 billion in All Funds and $1.668 billion in GRF to DCFS, reflecting a $74 million (4.7%) increase over FY26. Key provisions include an additional $19.8 million to support DCFS providers through enhanced reimbursement rates, a $4.7 million increase for the department’s scholarship program, $24.7 million dedicated to strengthening assistance for relative caregivers, and $35 million allocated for the Comprehensive Community-Based Youth Services Program.
Aging: The Department aging would see $2.225 billion All Funds/$1.999 billion GRF under the FY27 budget proposal. Highlights include $166.8 million extra for the Community Care Program to address caseload and utilization growth, and to annualize the January 1, 2026, $1.17/hour rate increase for in-home providers; and $3.3 million extra for the Adult Protective Services program.
Public Health: The budget proposal appropriates $1.359 billion All Funds/$286 million GRF to the Department of Public Health. Earmarked for funding is the Office of Health Care Regulation ($14 million) to hire an additional 61 staff for licensing, inspecting, and certifying healthcare facility compliance with state and federal regulations. Also, $22 million would go to support and promote full-spectrum reproductive care through community-based providers. The FY27 funding proposal maintains the Breast and Cervical Cancer Program and the AIDS Drug Assistance Program, while also increasing funding for the new newborn screening requirements.
Environmental Protection: Highlights from EPA’s proposed budget include $14 million for Electric Vehicle Rebates, $5 million extra to support the Brownfields Redevelopment Grant Program, IIJA water infrastructure programs (new and reappropriated funding), $90 million for emerging contaminants in small and disadvantaged communities (to address PFAS), and $1.07 billion for Lead Service Line Replacement.
Pensions: The Governor is calling for a portion of revenues set aside for income taxes be directed to the pension systems when not needed for timely refund payments (rather than transferring the full amount to the General Revenue Fund).
Capital Budget: The Governor’s budget request included $57.4B in FY27 Total Capital Appropriations. That figure includes not only $1.4 billion in new bond-backed funding for CDB deferred maintenance at state facilities and institutions of higher education, but also $100 million for deferred maintenance at DMA to generate additional federal matching funds.
The FY27 capital proposal also includes $1.7 billion for the following new bond authorization requests:
• $250 million for new missing middle and affordable housing programs at IHDA and DCEO.
• $500 million for downstate road and bridge construction IDOT projects.
• $50 million for a new Area Career Centers initiative at DCEO.
• $466 million for DCEO Prime Sites, site readiness, public infrastructure, and other business development grant programs.
• $50 million to expand the Surplus to Success program.
• $110 million for continued ERP implementation and technology modernization initiatives. • $100 million for the expansion of the water loan programs at IEPA.
Other General Budget Highlights:
· $37.5 million for the continued operation of capital programs such as the Open Space Lands Acquisition and Development Grant Program
· $328 million for weatherization programs to assist low-income households with energy efficiency
· $2 million to support two new cadet classes to hire 100 new state troopers
· $5.6 million for early implementation costs of the Clean Slate Act
· $10 million for the Homeland Security Preparedness and Response Grant Program
· $2 million for the Illinois Nonprofit Security Grant Program
· $3 million for the Innovation Vouchers Program
· $6.5 million for the Small Business Innovation Research/Small Business Technology Transfer (STTR) Phase I Matching Grant Program
· $50 million to the Area Career Centers capital grant program for facility modernization and program enhancements to create educational and career pathways
· $20 million for Manufacturing Training Academies (MTA) capital grants to provide funds for workforce training partnerships with community colleges and private industry. Additional MTA investments will position Illinois to capitalize on growth in nuclear energy generation, as well as other advanced industries.
· $20 million for Illinois Works Pre-Apprenticeship Program to continue investing in the State’s workforce development pipeline and train qualified, diverse candidates ready to enter the workforce in construction and building trades
· $200 million for public infrastructure capital grants for roads and bridges, sewer and water mains, and public transportation
· $35 million capital investment in Rebuild Illinois Downtowns and Main Streets to revitalize business corridors and support small businesses
· $100 million investment in Site Readiness Illinois (SRI) to advance critical capital infrastructure improvements and ensure Illinois remains competitive for large-scale domestic and international projects
· $65 million investment in Prime Sites funding to support companies relocating to or expanding operations in Illinois to assist with large-scale capital investment projects
Food and Pharmacy Deserts: A new tax incentive program keying in on independent grocery stores and pharmacies located in food or pharmacy deserts has been proposed by Governor Pritzker. Called EDGE Essentials, the initiative aims to provide maximum payroll withholding benefits to the targeted facilities. The proposed budget allocates $2 million to the Illinois Grocery Initiative to help address food insecurity in areas of food deserts.
Gaming: The Governor proposes merging the Illinois Gaming Board and Illinois Racing Board into a single Department of Gaming Regulation and Enforcement. This new agency will regulate, audit, and collect taxes from all types of gambling, including casinos, video gaming, horse racing, off-track betting, racinos, and sports wagering.
Governor’s Affordability Agenda: The Governor also proposed a series of items aimed at making life more affordable for working families. Included in the agenda are:
Housing: The Governor introduced the Building Up Illinois Developments (BUILD) initiative — a comprehensive plan to expand housing for working families by accelerating home construction through a coordinated strategy. The BUILD initiative would include enacting statewide legalization of a wider range of housing options, allowing homeowners to add Accessory Dwelling Units to existing properties, and permitting developers to build housing without parking requirements. Also a part of the new initiative: several proposals to assist developers, such as streamlining the permitting process, standardizing impact fees, and modernizing building codes.
The FY 27 budget provides $250 million for capital investments and grants aimed at encouraging development and helping people buy homes. This includes $100 million dedicated to building unused housing and $50 million for down payment assistance targeted at first-time buyers. An additional $100 million in capital grants will help municipalities address initial infrastructure obstacles that can delay viable housing projects. The Governor’s Fact Sheet is here.
The Governor’s Housing Package was filed on Thursday in the Illinois Senate:
SB4061 CTY/MUNI BUILDING CODES-STAIRS
SB4062 MUNI CD-IMPACT MITIGATION FEES
SB4063 MUNI CD-BUILDING PLANS/INSPECT
SB4064 MUNI CD-RESIDENTIAL PARKING
Energy: Governor Pritzker urged legislators to carefully assess the state’s future energy needs. He proposed a two-year suspension on new data center tax credits to ensure that the expansion of data centers does not compromise energy affordability or stability for families across Illinois.
The Governor highlighted collaborative efforts with 13 other governors from the PJM region, requesting expedited action from the grid operator. He noted that PJM implemented a price cap, which is projected to save regional customers $45 million through 2030. Additionally, he advocated for requiring data center developers to fund capacity resources necessary for their operations, thereby safeguarding consumers against increased energy rates. The Governor also reported that MISO, the central and southern Illinois grid operator, has committed to bringing additional projects online.
Nuclear energy was also part of the Governor’s message. Citing the need to put Illinois on a responsible, long-term pathway to consider new advanced nuclear energy, Pritzker issued Executive Order 2026-01,The measure directs the llinois Power Agency and the Illinois Commerce Commission — in conjunction with other states agencies — to evaluate potential nuclear sites, develop a modern legal and regulatory framework, and identify any updates needed for safety and siting standards. Pritzker’s goal is to deliver at least two gigawatts of new nuclear capacity with construction beginning by 2033. Read more here.
Ban Junk Fees: As part of the his affordability agenda, Pritzker is proposing a ban on so-called “junk fees” — surprise charges concealed from customers until the final stages of purchase. Pritzker’s proposal would prohibit the advertising of prices that do not disclose required fees upfront and require fee transparency across a variety of platforms and services. Read more here on Junk Fees.
Homeowners Insurance: Arguing that homeowners’ insurance rates could increase by over $750 per household this year, the Governor urged the Illinois House to pass HB 3799 (Gabel/Hastings), which would set new rules for this type of insurance. The measure passed the Senate 41-15-1 during Veto Session, but the vote to concur in the House failed 56-37-6. The House could reconsider the measure this spring.
Community College Baccalaureate Program: Once again, the Governor proposed a plan to allow some community colleges to offer four-year baccalaureate degrees, making them more accessible to working adults, particularly those not living near a public university. Approval from both the Illinois Board of Higher Education and the Illinois Community College Board. Through the CCBP, community colleges could provide programs in subject areas that have been identified as having unmet workforce needs in their region. More information is here.
Screen-free Schools: For the second year in a row, the Governor proposed legislation to require all school districts to adopt a cell phone policy that bans using phones during classroom instruction.
Children’s Social Media Safety Act: Believing the state needs to do more to protect children from the dangers of social media, the Governor proposed the Children’s Social Media Safety Act. The measure aims to empower parents in their children’s social media engagement, decrease the harmful effects that social media has on children, improve safety and privacy online, and prevent financial exploitation of children.
Looking Ahead: Appropriations committees will now begin to review the budget at the agency level. The Legislature is scheduled to adjourn on May 31st. The new budget year begins July 1.
The Budget Briefing Document is here. The Governor’s speech is here.
GOVERNOR’S HIGHLIGHTS:
Illinois Reporting First Case of Measles: The Illinois Department of Public Health is reporting this year’s first confirmed case of measles in the state; an adult residing in the Metro East area. The individual recently returned from travel out of state. Read more here.
Gubernatorial Appointments: Governor Pritzker appointed the following:
· Anusha Thotakura will continue to serve as a Member of the Illinois Health Benefits Exchange Advisory Committee
· Lila Valinoti will continue to serve as a Member of the Illinois Health Benefits Exchange Advisory Committee
· Luvia Moreno will serve as a Member of the State Board of Education
104th ILLINOIS GENERAL ASSEMBLY:
The Illinois General Assembly stands adjourned for the week, after having been in session Tuesday through Thursday. Legislators will return to session Tuesday, February 24 – Thursday, February 26.
Although several committees were scheduled to meet this week, many cancelled their meetings because legislation was not ready for a vote. Hearings for next week can be accessed here for the House and here for the Senate.
March 13 is the deadline to pass substantive bills out of Senate committees. March 27 is the House committee deadline.
The Legislative Audit Commission unanimously recommended Chris Meister as Illinois’ next Auditor General. Meister has been the executive director of the Illinois Finance Authority since 2009, overseeing tax-exempt bonds and the state’s Clean Water Initiative. Previously, he served as legislative director and associate general counsel at the Illinois Department of Commerce and Economic Opportunity and clerked for Illinois Supreme Court Justice Mary Ann McMorrow. The recommendation will be forwarded to the General Assembly, which must officially confirm Meister by adopting a joint resolution. If approved, he will succeed retiring Auditor General Frank Mautino.
Senator Neil Anderson resigned from Senate Republican leadership and was removed as minority spokesperson on the Senate Executive and Assignments committees after filing a package of legislation that could impose the death penalty on women who receive abortions and individuals involved in the in vitro fertilization process. In his resignation, Anderson wrote that leadership “requires a willingness to help direct policy in ways that, at times, require compromise for political advantage.” He further wrote, “At this point, I am not willing to compromise or set aside what I believe to be true regarding the rights and protection of our unborn neighbors, even where some within our caucus may disagree or view the issue differently.”
Key 2026 Session Dates:
March 13: Deadline — Substantive Senate Bills out of Committee
March 27: Deadline — Substantive House Bills out of Committee
March 17: Primary Election
April 17: Deadline — 3rd Reading Substantive Bills in First Chamber
May 8: Deadline — Substantive Bills out of Committee in Second Chamber
May 22: Deadline — 3rd Reading Substantive Bills in Second Chamber
May 31: Adjournment