Pritzker faces toughest budget challenge yet as deficit soars
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When the governor addresses the General Assembly today, he'll lay out his plan to plug a $3 billion-plus deficit in the 2026 state budget.
The big picture: With federal COVID-19 funds drying up and the economy slowing, Gov. JB Pritzker faces the biggest budget crisis yet in his two terms in office.
- It does not help that federal funding for the state is in limbo as the Trump administration considers sweeping budget cuts.
By the numbers: Illinois went from an $890 million surplus last year to a $3.2 billion deficit this year, mostly because health care and pension costs spiked.
- The annual state budget is just over $53 billion.
State of play: The governor has hinted that new revenue streams are not an option and tax hikes are a last resort, leaving belt-tightening and spending cuts as the only viable option to balance the budget.
Yes, but: Democratic lawmakers suggested late Tuesday that revenue projections have improved.
What they're saying: "It's very important that we live within our means in this state and that we not resort to tax increases as a way to balance the budget," Pritzker said last month.
Friction point: Lawmakers are asking for more money this year, for things like schools.
The other side: Republicans say the deficit is due to out-of-control spending by Democrats, who control both the governor's mansion and the General Assembly.
- Some are even going further, calling for a DOGE-like audit of state spending similar to what Elon Musk is leading at the federal level.
- Rep. John Cabello (R-Rockford) introduced a House bill that would create an Illinois Department of Government Efficiency.
- The bill would call for a board to comb through state finances looking for wasteful spending and recommend action to the General Assembly.
- "I'm trying to save the taxpayers money," Cabello told WTTW.
Zoom in: State Republicans have targeted areas to audit, suggesting they would first dive into spending on education, including Chicago Public Schools, then the Illinois Department of Human Rights, and identify duplicative local governments for consolidation.
- Eliminating duplicative governments has been a Republican issue for over a decade, championed by then-Gov. Bruce Rauner in 2016.
- Illinois has the most units of government in the country.
Reality check: The Democrats own the majority in the House, so Cabello's bill is likely dead on arrival.
One of the biggest problems continues to be the state's pension liability, which is expected to be over $11 billion in 2026.
- The state cannot modify or cut existing pension payments, thanks to an Illinois Supreme Court ruling in 2015.
Zoom out: New revenue streams have been floated, like legalizing internet gambling and taxing sales for services like dry cleaning and plumbing.
- The Civic Federation suggests the expanded sales tax could bring in over $2 billion.
The bottom line: Wednesday's speech is just the beginning of a months-long negotiation to reach a balanced budget.
What's next: Pritzker will deliver his budget address at 12pm Wednesday. You can watch it here.