{"id":12388,"date":"2025-06-16T15:20:00","date_gmt":"2025-06-16T20:20:00","guid":{"rendered":"https:\/\/www.thexradio.com\/news\/?p=12388"},"modified":"2025-06-16T15:20:00","modified_gmt":"2025-06-16T20:20:00","slug":"governor-signs-55-1-billion-state-budget-reliant-on-700-million-in-new-taxes","status":"publish","type":"post","link":"https:\/\/www.thexradio.com\/news\/local-news\/12388-governor-signs-55-1-billion-state-budget-reliant-on-700-million-in-new-taxes\/","title":{"rendered":"Governor Signs $55.1 Billion State Budget Reliant on $700 Million in New Taxes"},"content":{"rendered":"
\"image_print\"Print<\/span><\/a><\/div>

By BEN SZALINSKI<\/span>
\n<\/span>Capitol News Illinois<\/span>
\n<\/span>Bszalinski@capitolnewsillinois.com<\/span><\/a>\u00a0<\/span><\/p>\n

Gov. JB Pritzker signed Illinois\u2019 fiscal year 2026 budget into law Monday, taking shots at President Donald Trump\u2019s budget management to defend hard choices state lawmakers were forced to make this year.\u00a0<\/span><\/p>\n

The $55.1 billion spending plan set to take effect July 1 is the largest in state history and is supported by $55.3 billion in anticipated revenue, including more than $700 million in new taxes and more than $500 million in one-time revenues.<\/span><\/p>\n

Democrats approved the budget shortly before midnight on May 31 with only a handful of Democrats opposing it and all Republicans unanimously voting against it.\u00a0<\/span><\/p>\n

The budget\u2019s passage came after months of discussion about closing an initially projected $3 billion deficit and growing concerns about Trump\u2019s treatment of state funding in Washington. Pritzker, a possible 2028 presidential candidate, used Monday\u2019s budget signing ceremony in Chicago as an opportunity to draw a contrast between his and Trump\u2019s budgets.\u00a0<\/span><\/p>\n

\u201cWhile the Trump administration goes on Fox News lying about being fiscally responsible, Illinois is showing a better way: Balancing the budget while maintaining the programs that most people rely on,\u201d Pritzker said.\u00a0<\/span><\/p>\n

\u201cCongress is about to pass a federal budget that has one of the <\/span>largest budget deficits ever<\/span><\/a> in a year without a war or a pandemic. By contrast, Illinois is balancing its budget and prudently improving its fiscal condition,\u201d he said.<\/span><\/p>\n

Pritzker and other Democratic leaders acknowledged that crafting the FY26 budget was challenging but continues to make investments Democrats believe are priorities. Discretionary spending will increase by less than 1% in FY26, Pritzker said. Despite the minimal increase, the FY26 budget still spends about $2 billion more than FY25.<\/span><\/p>\n

Democrats \u201cace the challenges and uncertainty head on, and the result is a budget that is truly balanced with no gimmicks,\u201d House Speaker Chris Welch, D-Hillside, said.\u00a0<\/span><\/p>\n

But that\u2019s not how Republicans view the budget\u2019s fund sweeps and delayed transfers that free up hundreds of millions of dollars that can be used in FY26.<\/span><\/p>\n

\u201cThis approach sets Illinois up for failure by FY27 and continues a pattern of short-term thinking,\u201d House Minority Leader Tony McCombie, R-Savanna, said in a statement.<\/span><\/p>\n

Senate Minority Leader John Curran, R-Downers Grove, condemned lawmakers for failing to deliver significant tax cuts since Pritzker took office in 2019 when Illinois\u2019 budget totaled about $40 billion.\u00a0<\/span><\/p>\n

\u201cYou know it\u2019s a bad budget when it\u2019s based on nearly $1 billion in tax increases and enhancements,\u201d he said in a statement.\u00a0<\/span><\/p>\n

The governor also used his broad authority to reduce a pair of technical errors in the budget. The changes lower spending by $161.2 million from what lawmakers passed.<\/span><\/p>\n

Tax increases on tobacco and vape products, businesses<\/b><\/p>\n

The tax plan will raise $709 million in new revenue through what House Majority Leader Robyn Gabel, D-Evanston, characterized as \u201csmart new sources of revenue.\u201d They include new taxes on businesses, sports betting and tobacco and vape products, according to a list provided by the Senate Democratic caucus.<\/span><\/p>\n

The budget will not raise personal income, corporate income or sales taxes after <\/span>Pritzker told reporters<\/span><\/a> that he will veto any budget containing \u201cbroad-based\u201d tax increases just days before the bill passed.\u00a0<\/span><\/p>\n

The largest sum of new taxes \u2013 $336 million \u2013 are on businesses outside of Illinois that lawmakers call \u201cleveling the playing field\u201d and will require businesses to pay more income tax to the state on their profits.\u00a0<\/span><\/p>\n

Consumers will face new taxes on specific items, including taxes on tobacco, vaping and other nicotine products, which are increasing to 45% to raise $50 million. An existing telecommunications tax will also rise from 7% to 8.65% and raise $49 million to fund the statewide 988 hotline.<\/span><\/p>\n

A new tax on sports bets will charge betting sites 25 cents for the first 20 million wagers and 50 cents for each bet following that. It\u2019s projected to raise $36 million. Sports betting sites <\/span>FanDuel<\/span><\/a> and <\/span>DraftKings<\/span><\/a> have both announced they will implement 50-cent transaction fees on Illinois customers in response to the tax.<\/span><\/p>\n

Short-term rentals will have to begin paying the state\u2019s hotel operator\u2019s tax. The charge is already applied to hotels in the state, and Airbnb already pays it voluntarily, but more companies like Vrbo will now be required to pay the tax expected to raise an additional $10 million.\u00a0<\/span><\/p>\n

A pair of tax amnesty programs are expected to raise $228 million. Those programs are meant to incentivize taxpayers to pay overdue taxes.<\/span><\/p>\n

Fund sweeps, delayed transfers free up more for spending<\/b><\/p>\n

The budget deploys a series of tactics designed to free up more money for spending in the general fund in FY26 without repeating as a revenue source for the following year\u2019s budget.\u00a0<\/span><\/p>\n

It suspends the monthly transfer to the \u201crainy day\u201d fund for one year, freeing up $45 million for general fund use. Pritzker has taken pride in the fund\u2019s increase in recent years as it\u2019s grown to a balance of $2.3 billion, up from less than $60,000 when he took office. The fund is still estimated to grow by $161 million from interest and contributions from other funds in FY26.\u00a0<\/span><\/p>\n

Read more: <\/b>Illinois\u2019 $55.2B budget \u2018incomplete,\u2019 Civic Federation president says<\/b><\/a><\/p>\n

The state will also pause the final transfer of motor fuel sales tax revenue to the road fund in order to free up $171 million. That scheduled transfer was set in motion by the state\u2019s 2019 infrastructure plan, with the sales tax supporting bond debt taken out to complete road and bridge projects. This year was to be the final year of incremental transfers that took place over the past five years.\u00a0\u00a0<\/span><\/p>\n

The budget package also establishes a new $100 million BRIDGE fund that the governor can tap into \u201cin the event of unanticipated delays in or failures of revenues.\u201d The measure, an apparent nod to the uncertainty of federal funding amid ongoing congressional budget negotiations, will come from money swept from 57 different funds.<\/span><\/p>\n

When combined with the tax amnesty program, the fund sweeps and delayed transfers add up to at least $544 million of one-time revenue in this year\u2019s state budget that will not be available in FY27.\u00a0<\/span><\/p>\n

Health and Human Services<\/b><\/p>\n

The most notable change to health care funding is the elimination of the Health Benefits for Immigrant Adults, or HBIA, program that provided certain low-income noncitizens between ages 42 and 64 with state health care benefits akin to Medicaid. Eliminating the program saves the state $330 million, but the $110 million Health Benefits for Immigrant Seniors, or HBIS, remains in place.\u00a0<\/span><\/p>\n

\u201cThis was part of the challenge that we had to address,\u201d Pritzker said. \u201cIt was a program that had been growing significantly in cost. I do believe that everybody should have health care. I also know that we have to live within our means in the state of Illinois.\u201d<\/span><\/p>\n

HBIA\u2019s elimination comes after a recent audit found the two programs have cost the state at least $1.6 billion since their inception, far exceeding original estimates for the program. Last year, the state put new guardrails in place to limit enrollment into the programs and reduce costs through co-pays and other measures.\u00a0<\/span><\/p>\n

Read more: <\/b>Audit finds Illinois\u2019 noncitizen health care programs far outstripped original cost estimates<\/b><\/a><\/p>\n

HBIA\u2019s elimination also comes as Congress debates a domestic policy plan that could reduce reimbursements to states that provide health care benefits to noncitizens.<\/span><\/p>\n

In anticipation of broader reductions to health care and Medicaid reimbursements to the state, Illinois lawmakers also increased spending on other health care and social service programs:<\/span><\/p>\n