Illinois legislators gear up for final budget talks

SPRINGFIELD, Ill. (Capitol News Illinois) — Illinois lawmakers are still batting around a variety of budget ideas with just a few weeks left in the legislative session.

The state remains on track to take in more revenue than originally expected this year, which provides wiggle room —though not much — for lawmakers in the budgeting process. But there remains contention about what the budget should look like, not just between the parties but also between factions of Democrats, with some demanding hefty tax increases beyond what the governor has proposed.

The Illinois Revenue Alliance, a group of progressive lawmakers and organizations such as the Chicago Teachers Union, want to raise nearly $4 billion to increase funding for social services. They’d do that by creating new taxes and eliminating tax credits, but the governor hasn’t embraced any of the proposals, which are viewed as longshots.

Sen. Lakesia Collins, D-Chicago, is proposing a plan that would eliminate several economic development tax credit programs, such as programs that incentivize construction jobs, to free up $700 million in revenue annually, according to proponents. Many of the targeted programs, however, have support from the governor and members of both parties.

“Isn’t it time that we take a stand showing exactly what our values are here in Illinois, instead of allowing the state’s wealthiest corporations to double dip, racking in both federal and state tax breaks?” Collins said at a news conference on Wednesday.

Senate Republicans said the tax credits have helped attract projects to the state and grow the state’s economy.

“When you raise production costs, you put Illinois at a competitive disadvantage, and those costs get passed on through fewer jobs, less investment and higher prices for families,” Sen. Seth Lewis, R-Bartlett, said at a separate news conference. “We will be dismantling a framework that provides stability and predictability for long-term investment.”

A tax on digital advertising revenue exceeding $150 million nearly made its way into last year’s budget, and some lawmakers are pushing it again this year.

Another plan aims to tax corporations on profits made outside the United States. Rep. Maurice West, D-Rockford, argued that many businesses operating outside the country avoid paying taxes, and he wants Illinois to count all of their earnings in tax reporting.

“It’s about making sure the mom-and-pop shops on Main Street in Rockford aren’t bearing a heavier tax burden than a corporation with billions in revenue simply because they don’t have the army of tax lawyers,” West said.

Sen. Karina Villa, D-West Chicago, and Rep. Theresa Mah, D-Chicago, have also proposed a tax on billionaires’ annual gains and losses on assets each year even if they aren’t sold – an idea Gov. JB Pritzker has openly questioned.

“It’s never been done before,” Pritzker said last October. “Never been done before by any state. Never been done before by the federal government. … You don’t even know how it would work or if you could actually collect on it.”

Villa questioned why lawmakers declined to pass a constitutional amendment question to voters that would allow the state to tax millionaires at a higher rate. The deadline to put the measure to voters was May 3.

“Illinois families were told that there wasn’t enough time to ask the wealthiest to pay a few more dollars, to pay more and to contribute,” Villa said. “Yet there was time to move a Bears package that even the Bears management themselves say still needs changes. When Springfield decides something is urgent, it finds the time. Working families deserve to be treated with that same urgency.”

Senate Republican Leader John Curran, R-Downers Grove, said the state’s continued revenue growth to new annual records means there’s no need to raise taxes.

“More taxes on job creators and pushing capital investment out to other states is not going to grow the Illinois economy,” Curran said.

Pritzker proposed a far more limited plan for new revenue than what some Democrats want. His budget calls for raising $589 million in new revenue, including $200 million from a tax on social media companies based on how many users they have in Illinois. The other funds would come from adjustments to caps on operating loss deductions and table and electronic gambling games.

Revenue projections on track

Revenue in April was up $146 million, or 2%, compared to April 2025, with income tax receipts this March and April increasing by 4.1% compared to the same period last year, according to the bipartisan Commission on Government Forecasting and Accountability. The numbers fall in line with COGFA’s revised revenue estimates for the year, meaning there is no “April surprise” that would throw a wrench into final budget talks and projections remain on track.

Overall in FY26, revenue is up $1.7 billion through April, or 3.8%, compared to the same point in FY26. Strong-performing income tax receipts are helping to drive the revenue growth, which COGFA notes is exceeding the 0.9% growth originally expected this fiscal year. Sales taxes, which can serve as an indicator of consumer confidence, are also up 4% compared to last year.

Some Democratic budget leaders remain cautious about the future.

“It just is a reminder that … this is not a time for us to lose our grip on reality,” Rep. Kam Buckner, D-Chicago, a House budget leader, told Capitol News Illinois. “But this is, once again, just a result of us doing the right things, and I think we can do more of that as we get closer to passing another balanced budget.”

Rep. C.D. Davidsmeyer, R-Murrayville, a cochair of COGFA, attributed much of the revenue growth to new taxes that have been part of recent budgets.

“It just shows that, you know, despite the tax increases that we’ve seen over the years, the tax increases are what’s keeping funding and revenue stable, as opposed to just natural growth in our economy,” he said.

Not every revenue source is in the black, however. Corporate income taxes have been declining throughout the year and are down $262 million, or 6.8%, in part because of federal tax code changes that have lowered tax rates on businesses. Parts of Illinois’ tax code are tied to the federal code.

“I think lack of investment in the state of Illinois would be a big part of it,” Davidsmeyer said. “Plus, you know, if they can relocate part of their operation somewhere else and save money on taxes, they’re certainly smart to do so, unfortunately.”

Illinois has also received $45 million less from the federal government so far this year.

Final stretch

Despite Republican claims that the state is spending too much, Rep. Lindsey LaPointe, D-Chicago, says there’s room for more. She pointed to inflationary changes that mean the state spends less in certain areas than it did in 2000.

“When you account for inflation, when you account for pension contributions, and when you account for our evidence-based K-12 funding formula, the budget has only increased less than 1.5% since state fiscal year 2020,” she argued. “We are not overspending in Illinois.”

With the state on track to finish the year with a record $56 billion in revenue supporting a $55.1 billion spending plan, lawmakers could have room to supplement spending in the current budget. Some have called for releasing a 2% increase for higher education that was originally held back, as one example. Buckner said any additional spending this year is still to be determined.

Republicans see hard choices on the horizon for Democrats.

“I do believe the Democratic caucus is at an influx in which way they want to go,” Lewis said. “They have partners in the Senate Republicans, in wanting to maintain a budget that is not reckless, a budget that actually prioritizes the needs of making sure Illinoisans want to stay in Illinois and not leave.”

Republicans have been invited to budget meetings in the Senate, but those in the House remain out of the loop.

Davidsmeyer said preparing for the economy to decline should be a priority during the budgeting process as unemployment ticked over 5% in February.

“You hope that the economy remains strong, but in the state of Illinois, we’re putting additional pressures on ourselves that the federal government is not putting on us,” Davidsmeyer said.

(Reporting by Ben Szalinski, Capitol News Illinois. Brenden Moore contributed.)

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.

This article first appeared on Capitol News Illinois and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.