On February 19, Gov. J.B. Pritzker gave his annual State of the State and budget address. He outlined priorities for the State of Illinois in FY 2026 while highlighting the state’s fiscal successes under his leadership. Gov. Pritzker revised his FY 2025 revenue forecast to $53.9 billion, an increase of $421 million from his office’s November 2024 forecast, due to strong personal income tax and sales tax collections. Given the positive revenue adjustment, he proposed a total of $650 million in supplemental appropriations and transfers in FY 2025: a $550 million FY 2025 supplemental appropriations package and $100 million proposed transfer of funds to Fund 611. Assuming the supplemental appropriations and transfers occur, the state projects to have an $8 million surplus in FY 2025.

 

While the Governor’s Office of Management and Budget (GOMB) projected a $3.2 billion budget deficit in November, Gov. Pritzker revised those estimates to a balanced FY 2026 budget proposal. His FY 2026 budget proposal estimates $55.453 billion in General Funds revenues and $55.234 billion in General Funds expenditures, leaving an estimated $218 million surplus. $154 million of the projected surplus would be reserved for a contribution to the Budget Stabilization Fund (rainy-day fund). The budget proposal fully funds the state’s $10.6 billion FY 2026 statutorily required pension contribution and reserves $78 million to make an additional pension contribution to address the Tier 2 Social Security safe harbor issue. While not explicitly mentioned in the FY 2026 budget address, Gov. Pritzker left the door open to his proposal from last year’s budget address to extend the long-standing 90% funding in FY 2045 pension funding ramp to 100% funding in FY 2048. This would be accomplished by earmarking revenues from expiring bond obligations in FY 2030 and FY 2033 to pensions.

 

Projected General Funds revenues are up 2.9% (or $1.553 billion) over GOMB’s most recent estimate for FY 2025. Relative to the enacted FY 2025 budget, revenues are projected to increase by 4.08% (or $2.17 billion). The revenue forecast benefits from an estimated $489 million in revenue increases: $198 million General Funds increase from a new Delinquent Tax Payment Incentive Program, $171 million from pausing the final shift of state sales taxes on motor fuel purchases to the Road Fund, $100 million from the realignment of tax treatment for table and electronic games at casinos, and $20 million from eliminating the 280E state-level deduction for cannabis industry business expenses.

 

On the spending side, total General Funds expenditures are up 2.5% (or $1.3 billion) over GOMB’s most recent FY 2025 estimate, which includes $650 million in proposed supplemental appropriations and transfers. Relative to the enacted FY 2025 budget, spending is projected to increase 4.07% (or $2.16 billion). 75% of all spending increases result from three items: $350 million increase to the Illinois State Board of Education’s (ISBE) evidence-based funding formula for K-12 schools, $436 million increase in pension spending, and $738 million increase in medical expenditures. When factoring out these three increases, overall spending is up less than 1% over the enacted FY 2025 budget. The budget proposal cut funding for the Health Benefits for Immigrant Adults (HBIA) program, saving the state $330 million in General Funds spending relative to the FY 2025 budget. Funding for the Health Benefits for Immigrant Seniors (HBIS) will be maintained at $110 million General Funds.

 

The General Assembly will pass a final budget before they are scheduled to end on May 31. This proposal is subject to change throughout the coming months. See below for additional details from the State of the State and FY 2026 budget proposal.

 

State of the State Address Highlights

Fiscal Improvements

• Paid down more than $12 billion in debt.
• Grew the Budget Stabilization Fund (rainy-day fund) balance to over $2 billion.
• Increased the funded ratio of the state’s pension systems.
• Earned nine credit rating upgrades, the first upgrades in a quarter century.

 

Business Improvements

• In 2019, Illinois ranked 30th in CNBC’s list of Top States for Business. Today, Illinois ranks 15th.
• Illinois has the 5th largest state economy in the United States and would be the 18th largest in the world as an independent country.
• Ranked 2nd in the nation for corporate expansions and relocation destinations.
• In 2018, there were only 27 Rivian employees in Normal. There are now thousands.

 

FY 2025 Updates

• GOMB revised their FY 2025 General Funds revenue forecast to $53.9 billion, an increase of $421 million from their November 2024 forecast.
  • Individual income growth and a stable job market are strengthening personal income tax collections.
  • Consumer spending rebounded in the 4th quarter of CY 2024, benefiting sales tax collections.
• $650 million in proposed supplemental appropriations and transfers in FY 2025.
  • $550 million in proposed supplemental appropriations
  • $100 million proposed transfer of funds to Fund 611 for the Illinois Equal Justice Foundation Eviction Help Illinois Fund or the Fund for Illinois’ Future.
  • $8 million estimated surplus after the supplemental appropriations and transfers.
• The outlook for the remainder of FY 2025 and FY 2026 remains uncertain in large part due to potential federal policy decisions, such as federal funding cuts, tariffs, an expansion of the Tax Cuts and Jobs Act, and Federal Reserve interest rate changes.

 

FY 2026 Budget Proposal

Topline Figures

• $55.453 billion General Funds revenue projection in FY 2026, a 2.9% (or $1.553 billion) increase over GOMB’s most recent estimate for FY 2025 and an increase of 4.08% (or $2.17 billion) over the enacted FY 2025 budget.
• $498 million in proposed revenue increases:
  • $198 million General Funds increase from a new Delinquent Tax Payment Incentive Program.
  • $171 million from pausing the final shift of state sales taxes on motor fuel purchases to the Road Fund.
  • $100 million from the realignment of tax treatment for table and electronic games at casinos.
  • $20 million from eliminating the 280E state-level deduction for cannabis industry business expenses.
• With these adjustments, GOMB projects growth from each of the state’s top three revenue sources.
  • 5% or $980 million FY 2026 individual income tax revenue growth.
  • 2% or $353 million FY 2026 corporate income tax revenue growth.
  • 6% or $171 million FY 2026 sales tax revenue growth.
• $55.234 billion proposed FY 2026 General Funds expenditures, a 2.5% (or $1.3 billion) increase over GOMB’s most recent FY 2025 spending estimate, including $650 million in proposed FY 2025 supplemental appropriations and transfers, and a 4.07% (or $2.16 billion) over the enacted FY 2025 budget.
• Compared to the enacted FY 2025 budget, over 75% of the spending increase is from the following three areas. Without increases to these three areas, the overall spending increase would be less than 1%.
  • $350 million increase to ISBE’s evidence based funding formula for K-12 schools.
  • $436 million increase in pension spending.
  • $738 million increase in medical expenditures.
    • $397 million at HFS.
    • $341 million at CMS.
  • $218 million estimated FY 2026 budgetary surplus, with an estimated $154 million of that surplus reserved for a contribution to the Budget Stabilization Fund.

 

Pensions

• $10.6 billion for full funding of the certified FY 2026 pension contribution.
  • Includes a $78 million additional contribution to address Tier 2 Social Security safe harbor issue (separate substantive legislation yet to be passed).
• While not included in the FY 2026 budget proposal, Gov. Pritzker continues to advocate for the pension funding plan he announced at last year’s budget address to extend the long-standing 90% funding goal in FY 2045 to 100% funding in FY 2048. This plan would be achieved by earmarking half the proceeds from expiring bond obligations in FY 2030 and FY 2033 towards pensions.

 

Capital Budget

• $3 billion in reappropriated bonded capital investments first enacted in FY 2025.
• $915 million in added bond authorization for new and expanded programming.
  • $300 million for the new Surplus to Success program at CMS.
  • $200 million for expanded site readiness programs at DCEO.
  • $150 million for demolition and remediation of non-surplus, unused state property at CDB.
  • $140.2 million for continued economic and workforce development projects at DCEO.
  • $65 million for DoIT to upgrade IT systems related to electronic health records at DOC and DHS.
  • $60 million for DNR to continue improvement of Adeline Jay Geo-Karis Illinois Beach State Park.

 

Early Childhood Funding

• $21.7 million in operational funding for the Illinois Department of Early Childhood.
• $748 million to maintain investment in ISBE Early Childhood Block Grant funding.
• $200 million investment in funding for nation-leading Early Childhood Workforce Compensation Contracts.
  • $90 million increase to annualize the cost of the contracts and replace expired federal childcare funding.
• $85 million in additional investment to cover expected increased participation in the Child Care Assistance Program.
• $3.3 million to continue expansion of Dolly Parton’s Imagination Library.
• $10 million to support rate enhancements for the Early Intervention service providers.

 

K-12 Education Funding

• $11.192 billion General Funds ($15.87 billion All Funds) budget for ISBE.
  • $350 million increase to support Evidence-Based Funding (EBF)
  • $19.9 million increase for a total of nearly $1.2 billion in grants for school categorical grants to fully fund the Special Education-Orphanage Tuition and Regular Orphanage budget lines.
  • $1.3 million increase for Career and Technical Education programs to expand access to underserved students.
  • $3 million for State Literacy Plan implementation.
  • $45 million to fund the 3rd year of the Teacher Vacancy Grant Pilot Program.
  • $3 million to fund the Computer Science Equity Grant Program.

 

Higher Education

• $4.744 billion General Funds ($5.264 billion All Funds) budget for Higher Education.
  • $10 million increase to the Monetary Award Program (MAP) for a total funding amount of $721.6 million.
  • $46 million (3%) increase in general funds, with $37 million going to public universities and $9 million going to community college operations.
  • $15 million for the Pipeline for the Advancement of the Healthcare (PATH) Workforce Program.
  • $3 million to expand Common App simplified admissions use.
  • $10.75 million to continue funding for the Golden Apple Scholars.
  • $5 million to continue funding for the Golden Apple Accelerators.

 

Home Illinois

• $282.7 million to continue funding Home Illinois through the Department of Human Services. This is part of the overall housing investment strategy, which also includes:
  • $91.5 million for One System Initiative for shelters and other services for homeless populations.
  • $62.3 million for supportive housing, homelessness prevention services, shelter diversions, addressing racial disparities, and access to counsel.
  • $50 million for court-based rental assistance.
  • $42 million for emergency and transitional housing.
  • $25 million for Rapid Rehousing services for short term rental assistance and targeted support services.
  • $6 million for the Home Illinois Workforce Pilot Project at DCEO for employment opportunities.

 

Violence Prevention

• $40 million in increased funding to maintain the Reimagine Public Safety Act as federal COVID-era funds are depleted.
• $180 million for the Restore, Reinvest, and Renew (R3) Program.
• $4 million for statewide capacity building grants at CJIA.
• $13 million for Adult Redeploy and Diversion Programs.
• $16.3 million for Community-Based Violence Prevention Programs.
• $10 million for a law enforcement agencies corresponder pilot program.

 

Department of Human Services

• $7.903 billion General Funds ($13.917 billion All Funds) budget for the Department of Human Services.
  • $3.0 billion all funds for the developmental disabilities division at DHS (DDD).
    • $31.2 million to annualize FY25 placements and fund new placements under the Ligas Consent Decree.
    • $20 million for a $0.50/hour rate increase for Direct Service Providers (DSPs) effective January 1, 2026.
    • $17.5 million for a more than $1,600 annual increase for the Home-Based Adults with DD waiver program.
    • $9.7 million to adjust for the SSI increase of 2.5% for people served through the Home and Community-Based Waiver.
  • $105 million for the Home Services Program for liability and caseload growth.
  • $85 million for liability and caseload growth in the Child Care Assistance Program.
  • $12.5 million increase in support of the Williams and Colbert consent decrees.
  • Proposes a dedicated funding stream to support 9-8-8 services.
  • $2.5 million for a 2% COLA for inpatient and outpatient substance abuse treatment services.
  • $34.0 million to maintain substance abuse treatment and prevention services as federal funds expire and to meet new Maintenance of Effort requirements.
  • $5.0 million for a Re-integration Program incentive to provide up to $50,000 per resident for CILA providers upon their move from SODCs to the community-based group homes.
  • $7.5 million for a 3% COLA for TANF cash assistance.

 

Department of Children and Family Services

• $1.610 billion General Funds ($2.472 billion All Funds) budget for the Department of Children and Family Services.
  • $17.0 million to help DCFS providers maintain a competitive wage structure.
  • $4.8 million increase for the department’s scholarship program, which will serve 1,090 youths in FY26.

 

Healthcare and Family Services

• $9.359 billion General Funds ($45.302 billion All Funds) budget for the Department of Healthcare and Family Services.
  • $300 million to fully annualize costs of Medicaid program rate increases and programmatic changes enacted last spring, most of which are effective mid-FY25.
  • $191.8 million for comprehensive behavioral health services integrated with physical healthcare.
  • $132.8 million to continue implementation of the Pathways to Success Program to provide care coordination, mentoring, and support services to eligible children.
  • $27.7 million to develop an in-state network of Psychiatric Residential Treatment Facilities (PRTFs).
  • $132 million for the Health Benefits for Immigrant Seniors (HBIS) program, of which $110 million is appropriated from GRF.
    • Health Benefits for Immigrant Adults (HBIA) is not funded in the proposed budget, saves the state $330 million GRF relative to the FY 2025 budget.
  • $15 million for the Medical Debt Relief Pilot Program Fund.
  • $132.8 million for the continued implementation of the Pathways to Success Program to provide care coordination, mentoring, and support services to eligible children.

 

Department of Public Health

• $292 million General Funds ($1.715 billion All Funds) budget for the Department of Public Health.
  • $6 million increase for the Office of Health Care Regulation for licensing, inspecting, and certifying that healthcare facilities are compliant with state and federal regulations.
  • $450,000 for the Certified Nursing Assistant (CNA) Intern Program designed to increase hiring and retention at facilities through education, mentoring, and financial assistance.
  • $250,000 for the Certified Medication Aide program to allow medications to be provided by non licensed certified nursing assistants.
  • $24 million to maintain support for reproductive health initiatives, including:
    • $10 million for a public-facing navigation hotline to centralize and streamline appointment making.
    • $2 million for grants for freestanding reproductive healthcare clinics.
    • $5 million for a learning/training collaborative for providers.
    • $4 million for Birth Equity initiatives.
  • $8.5 million in maintained funding to respond to unexpected public health threats and emergencies.

 

Department on Aging

• $1.796 billion General Funds ($2.022 billion All Funds) budget for the Department on Aging.
  • $144.4 million increase for the Community Care Program (CCP) for caseload growth, utilization, and annualization of rate increase for in-home providers.
  • $8.0 million increase for the Home-Delivered Meals Program.
  • $800,000 to support senior services in rural areas.
  • $2.2 million increase in funding for the Adult Protective Services (APS) program.

 

Department of Veterans’ Affairs

• $160.5 million General Funds ($234.5 million All Funds) budget for the Department of Veterans’ Affairs.
  • $22.8 million to onboard staff to support 100 residents at the Chicago Veterans’ Home.

 

Department of Corrections

• $2.071 billion General Funds ($2.185 billion All Funds) budget for the Department of Corrections.
  • $23.9 million increase for personal services to staff the 28 correctional facilities across the State.
  • $53.0 million for new partnerships with university health service programs to supplement contractual medical staff.
  • $11.0 million increase for statewide hospitalization expenses.
  • $2.0 million increase for annual repair and maintenance expenses to meet recommended minimum levels of funding.

 

Illinois State Police

• $452.5 million General Funds ($959.8 million All Funds) budget for the Illinois State Police.
  • $5.4 million to support two new cadet classes to hire and train 100 additional sworn troopers.
  • $9.6 million funding for expected FY25 graduates.
  • $5.0 million to transition from WAGE, a 35-year-old legacy human resource system customized for sworn law enforcement officers, to a new human resource management system.
  • $1.3 million for the Safe2Help program, a free, voluntary program offered to public and private schools in Illinois, which has a goal of encouraging students to “Seek Help Before Harm.”
  • $1.0 million for contractual services for expenses related to incar and body-worn cameras.

 

Illinois Emergency Management Agency and Office of Homeland Security

• $27.7 million General Funds ($2.249 billion All Funds) budget for the Illinois Emergency Management Agency and Office of Homeland Security.
  • $2.5 million increase to fund the Homeland Security Preparedness and Response grant program.
  • $2 million increase to the deposit for the Illinois Nonprofit Security Grant Program to provide grants and support to organizations throughout the State for security improvements to prevent, prepare for, or respond to acts of terrorism.

 

Department of Juvenile Justice

• $153.8 million General Funds ($166.8 million All Funds) budget for the Department of Juvenile Justice.
  • $1.3 million increase for IYC Lincoln to become operational in summer 2025.
  • $3.0 million in increases to meet the statutory requirements of 105 ILCS 5/13-40 for School District 428 operated by DJJ.
    • $2.0 million for extended education services to offer high school education services in DOC facilities.
    • $1.0 million for IYC Harrisburg to provide educational services and emerging adult programming to emerging adults in DOC custody.
  • $1.4 million increase for contractual healthcare services and increased programming.

 

Department of Natural Resources

• $103.7 million General Funds ($636.1 million All Funds) budget for the Department of Natural Resources.
  • $35 million proposed for new awards in FY25 to support continued operation of key capital programs such as Open Space Lands Acquisition and Development (OSLAD).
  • $2.5 million in continued funding for the Youth and Young Conservation Education program for underserved and underrepresented youth jobs and education within environmental conservation.

 

Environmental Protection Agency

• $658.6 million All Funds budget for the Environmental Protection Agency.
  • $14 million for Electric Vehicle (EV) rebates for eligible participants, encouraging use of EVs to improve air quality in the state.
  • $4.6 million increase to expand the Household Hazardous Waste Collection Program to support one-day events, long-term facilities, the Residential Sharps collection program, and firefighting foam collection.
  • $1.36 billion in IIJA-related capital appropriations for IIJA water infrastructure programs.
    • $90 million to address emerging contaminants in small and disadvantaged communities to confront per- and polyfluoroalkyl substance (PFAS) pollution.
    • $845.9 million in funding for Lead Service Line Replacement grants.

 

Department of Commerce and Economic Opportunity

• $178.5 million General Funds ($4.483 billion All Funds) budget for the Department of Commerce and Economic Opportunity.
  • $258 million for weatherization programs to help low-income residents and households.
  • $5 million in new funding for the Illinois Grocery Initiative to address food insecurity faced by millions of Illinoisans living in urban and rural food deserts.
  • $4.4 million for the Office of Trade and Investment to support Illinois companies by realizing their export potential through the Illinois State Trade and Export Promotion program.
  • $20 million to the Illinois Works Pre-Apprenticeship Program focused on construction and building trade careers.
  • $17 million new funding for the Employer Training Investment Program to help keep Illinois workers’ skills up to date.
  • $7.5 million for the Workforce, Technology, and Economic Development Fund for the Fast-Track Workforce Program.
  • $3 million in continued funding for DCEO Job Training Program grants.
  • $10 million for the Federal Grant Support Program, offering grants to local governments and businesses competing in federal grant programs.
  • $1 million for the Made in Illinois program.
  • $50 million for the Rebuild Illinois Enterprise Fund.
  • $9 million for a multiyear initiative to develop and implement a one-stop business portal to assist individuals wishing to create new businesses in or relocate businesses to Illinois.
  • $2 million in continued annual funding for rural economic development, intended to connect communities and improve access to state and federal aid through outreach or technical assistance from rural navigators.
  • $7.5 million for the Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) Phase I Matching grant program.
  • $5 million for the Innovation Vouchers Program.

 

Surplus to Success Program

• $300 million to the Department of Central Management Services (CMS) to launch the “Surplus to Success Program” to ready unused or excess State-owned sites, which will:
  • Remediate State-owned sites and repurpose them to enhance economic opportunities.
  • Attract new businesses and economic opportunities, potentially resulting in billions of dollars in private investment.
  • Increase local revenues by adding these properties to the local property tax rolls.
  • Spur community revitalization by cleaning up and repurposing unsightly, deteriorating properties.
  • Save the State and taxpayers millions of dollars in security and upkeep costs.
  • Surplus to Success sites include:
    • Locations where state facilities have been fully closed.
    • Deteriorated buildings on state land in total disrepair.
    • Unused land and acreage where the state facility does not utilize the entire space.