Illinois Democrats Weigh Budget Options as Strong Revenue Growth Meets Uncertain Future

Illinois lawmakers are entering the home stretch of budget negotiations with six weeks left in the legislative session, monitoring better-than-expected revenue growth alongside the uncertainty that defines governing during Donald Trump's presidency.

Revenue in fiscal year 2026 was up $1.5 billion through March compared to the same point last year, outpacing initial estimates according to the Commission on Government Forecasting and Accountability's March update.

Gov. JB Pritzker in February proposed increasing spending by just 0.5% outside of required areas like education and pensions for the upcoming budget year that begins July 1. The strong revenue performance could give lawmakers greater flexibility in crafting the roughly $56 billion upcoming fiscal year 2027 budget, but the upcoming April report will likely tell a fuller story.

"That's going to be the final way to let you develop a number," House Speaker Emanuel "Chris" Welch, D-Hillside, told reporters. "The reason a lot of things don't happen until later is because we need to know the tax receipts."

Deputy Gov. Andy Manar, who leads budgeting in Pritzker's office, told a Senate appropriations committee last week the governor's office is planning to increase their FY26 revenue estimate in the coming weeks.

"We're not surprised that the revenue is coming in higher than what we anticipated or the governor put into his budget for FY27... we see it as good budgeting," Manar said. "At the same time, we're holding the line on spending, and at the same time, we still have these huge variables that are coming from Washington."

The FY26 budget included a provision that raised higher education spending by 1% for the year and held back an additional 2% in funding that could be released if Pritzker felt there was enough flexibility to spend the money. Sen. Chapin Rose, R-Mahomet, said the current revenue track means Pritzker should release the $29 million.

"Certainly because of what we have seen in terms of revenue growth because the state's economy is growing, we should revisit that," Manar said in response to questioning from Rose. "We certainly should, but that's going to be in conjunction with the General Assembly."

Senate President Don Harmon, D-Oak Park, was also cautious about moving quickly.

"I'm grateful that this year's path to a responsible, balanced budget looks a little easier than it looked several months ago," Harmon told reporters. "That said, I think next year is looking just as dire as predicted. I don't think we should make any rash, short-term decisions without figuring out what the long term looks like."

COGFA's updated projections in March expect revenue to decline in FY27 by more than $400 million, even after better-than-expected FY26 results. It also remains to be seen how the war in Iran affects state revenue and the broader economy.

With Pritzker pushing for a generally flat budget this year, some Democrats have their own idea for raising revenue: taxing millionaires. Many progressive Democrats and Welch want the General Assembly to pass a constitutional amendment referendum to be placed on November ballots. It would allow lawmakers to establish a new tax on millionaires and devote that revenue to property taxes and funding schools.

Illinois' constitution requires a flat tax regardless of income, meaning voters must approve the change. Lawmakers have to pass a resolution to present the question to voters six months before the election, which is May 3.

Though Pritzker and Democrats broadly support the concept, it faces hurdles beyond the shrinking window to get it passed. Voters soundly rejected a broader question in 2020 to establish a graduated income tax structure.

"I've always supported a more fair tax policy," Harmon said. "I led the charge on prior constitutional amendments. The message that was very clear to me after the last effort was the voters weren't quite ready for that. So we're going to have to do some serious evaluation here before advancing anything right now, but certainly open to the conversation."

Former Gov. Pat Quinn has led a push to get the amendment on the ballot. At a Springfield news conference on Monday, he pointed to the approval of a millionaires tax on nonbinding referendums in 2014 and 2024 as proof that it will pass in 2026.

"This administration in Springfield, Illinois, I like a lot of what they do, but they're proposing to cut the homelessness budget over two years by almost $40 million," Rep. Lindsey LaPointe, D-Chicago, said of Pritzker's proposal. "That ain't right."

Pritzker proposed spending $14.4 million less on Home Illinois, the state's main homeless prevention program, in FY27 compared to what was spent in FY25.