Illinois Fiscal Update: GOMB February 2026 Report Summary

On February 9, 2026, the Governor’s Office of Management and Budget (GOMB) released an update to its October 2025 Economic and Fiscal Policy Report, outlining potential state budget impacts from H.R. 1 (the “One Big Beautiful Bill”) and Trump administration actions. Notably, these projections represent a worst-case scenario, and some of the cuts shown may not ultimately take effect. Consistent with the Pritzker administration’s approach, it is preferable to plan for the worst-case scenario and later revise upward than to project an optimistic outcome that may not materialize, leaving the state unprepared for fiscal pressures.

Tax Provisions

The Department of Revenue initially estimated H.R. 1 would reduce FY 2026 General Funds revenue by $830M, with business tax benefits accounting for approximately 95% of this loss. In response, the General Assembly passed Public Act 104-0453 (effective December 12, 2025), which decoupled Illinois from H.R. 1’s bonus depreciation provisions and updated the state’s treatment of Net CFC Tested Income (NCTI). These measures reduced the projected FY 2026 revenue loss by $243M, limiting the hit to $587M. Revenue losses are expected to decrease in future years, as much of the impact reflects accelerated tax benefits rather than permanent losses.

SNAP

Effective October 1, 2026, H.R. 1 increases the state’s share of SNAP administrative costs from 50% to 75%, adding an estimated $80M annually. Beginning October 1, 2027, states must share the cost of SNAP benefits based on their payment error rate (PER). Illinois could face up to $705M in annual penalties if it falls into the highest (15%) penalty bracket, though this represents a worst-case scenario. The Department of Human Services is hiring 250 additional staff ($20M) and investing over $100M over two years in systems and staffing to reduce error rates before penalties take effect in FY 2028.

Medicaid

H.R. 1 phases down the maximum provider tax rate for hospitals and MCOs from 6.0% to 3.5% by FY 2032, declining 50 basis points annually. Absent legislative changes or state backfill, this will reduce federal Medicaid support by approximately $2.8B annually by FY 2031, requiring a $1.7B increase in State General Funds to maintain federal matching levels. Total Medicaid funding is projected to decline by $4.5B by FY 2031, rising to $6.1B annually by FY 2033, $3.8B of which is lost federal support. Cumulative federal losses from FY 2028-FY 2031 total $6.6B. Additional H.R. 1 provisions-including work requirements and cost sharing-may reduce state Medicaid obligations, but those impacts have not yet been quantified.

TANF and CCDF

In January 2026, the Trump administration threatened to freeze federal funding for TANF, CCDF, and the Social Services Block Grant in Illinois and four other states (California, Minnesota, New York, and one other). This freeze is currently blocked by a court-ordered preliminary injunction. GOMB’s updated projections reflect a worst-case scenario of approximately $1B in annual losses if the freeze takes effect. The potential fiscal cliff emerges in FY 2027 due to federal grant cycles; the state has sufficient cash flow to navigate the remainder of FY 2026.

Important Upcoming Dates – Statewide

February 18 – Governor’s State of the State and Budget Address

March 13 – Initial Chamber Committee Deadline (Senate)

March 27 – Initial Chamber Committee Deadline (House)

April 17 – Initial Chamber Third Reading Deadline

May 8 – Opposite Chamber Committee Deadline

May 22 – Opposite Chamber Third Reading Deadline

May 31 – Adjournment

In the News

Lawmaker says Illinois behind 44 states in legislative transparency – The Center Square, February 12, 2026

Illinois House Minority Leader Rep. Tony McCombie, R-Savanna, is renewing her bid to increase transparency in state government by making live legislative committee hearings available to the public after they occur – a shift from the current “live-only” access system.

New voting-rights push surfaces in Springfield to prevent suppression at the polls – Chicago Sun-Times, February 12, 2026

State Sen. Graciela Guzman has introduced the Illinois Voting Rights Act, codifying federal voting protections into state law ahead of November’s general election. The legislation would give courts explicit power in redrawing racially imbalanced legislative maps and help non-English speakers at the polls.

Illinois GOP Senate candidates take stage in first major debate – Capitol News Illinois, February 12, 2026

If the Democratic primary to replace retiring U.S. Sen. Dick Durbin has been the main event in Illinois politics over the past year, the Republican contest has largely played the undercard.

County tax sale slated for March despite no legislative fix – Crain’s Chicago Business, February 12, 2026

Cook County is quickly running out of time to hit the brakes on the annual tax sale for past-due properties, a process that has been found by the U.S. Supreme Court to violate homeowners’ constitutional rights. The 2025 tax sale was moved from August to March of this year. But without fast action by Springfield legislators in the next week to delay it again, the sale will resume, and County Treasurer Maria Pappas may have no choice but to pile on thousands more violations.

Illinois sues feds over $600M in cuts to HIV, lead poisoning prevention grants – Chicago Sun-Times, February 11, 2026

Illinois Attorney General Kwame Raoul joined a coalition of legal officials suing the Trump administration over its attempts to withhold $600 million in public health grants for Illinois and three other Democratic-led states, according to Raoul’s office.

Illinois GOP state reps call on Dems to stop taxing s’mores, other goods – The Center Square, February 11, 2026

Illinois House Republicans are calling on Democrats to oppose new tax proposals. State Rep. Dave Severin, R-Benton, said House Bill 4459 would impose fees on backyard campfires, and House Bill 5112 would impose taxes on retail carryout bags.

Illinois proposal makes businesses financially liable for climate change – Advantage News, February 11, 2026

A proposal to create an Illinois Climate Change Superfund is drawing sharp criticism from Republican lawmakers who warn it would hand sweeping authority to unelected regulators, drive businesses out of the state and ultimately raise costs for consumers.

Trump administration cutting millions in Illinois HIV prevention grants, citing ‘agency priorities’ – Chicago Sun-Times, February 10, 2026

In a first wave of cuts, at least $29 million in Illinois grants are on the chopping block, including city, state and other health centers’ HIV prevention programs, according to a list of grants obtained by the Chicago Sun-Times.

Moody’s: Illinois to lose jobs, population this year – Crain’s Chicago Business, February 10, 2026

Illinois is headed for job losses and a renewed population decline this year, a rare double hit that economists say will weigh on the state’s economy for several years. Tariffs and tighter immigration policies adopted by the Trump administration are expected to disproportionately hurt Illinois, which relies heavily on agriculture, manufacturing and a steady flow of new workers and residents from abroad, according to a new report from Moody’s Analytics.

Pritzker announces bond expansion, says progress has been made with Bears – The Center Square, February 9, 2026

Gov. J.B. Pritzker says progress has been made in conversations with the Chicago Bears. Pritzker announced the expansion of sales tax and revenue bonds for capital projects at a press conference in Belleville on Monday. The governor said STAR bonds were not written for the Bears. “This can be used by local governments. We’re not specifically looking at it that way, perhaps the Bears are,” Pritzker said.

Illinois appeal for summer storm disaster relief denied by Trump administration – Chicago Sun-Times, February 9, 2026

The Trump administration has officially denied an appeal from the state of Illinois for disaster relief funds for summer storms last year that affected 438,000 residents in five Illinois counties.

Illinois eyes smarter park funding: handicap accessibility gets priority – The Center Square, February 7, 2026

Illinois lawmakers are proposing a change to the way state parks receive funding, one that could give taxpayers more bang for their buck, according to the bill’s sponsor.

Illinois to lose $587M due to Trump’s budget bill, pay more for SNAP benefits, report says – FOX 32, February 7, 2026

The State of Illinois is projected to lose more than half of a billion dollars in federal funding this fiscal year, due to President Donald Trump’s budget law, and pay more for SNAP benefits, according to a new report.

Walmart, Amazon and CPS top list of employers where Illinois workers still need SNAP benefits – WBEZ Chicago, February 6, 2026

An analysis by the Chicago Sun-Times identified the top 10 employers statewide in terms of the number of their workers who receive SNAP food assistance. Chicago Public Schools, which employs about 60,000 workers, stands out as the lone public body among the list of large, profitable and mostly publicly traded corporations like Walmart, Amazon, McDonald’s and FedEx whose chief executive officers get paid as much as tens of millions of dollars each year.

Grocery prices in Chicago have climbed double digits over the past year despite Trump’s vow to lower them – Chicago Sun-Times, February 13, 2026

It’s been more than a year since the Chicago Sun-Times started tracking the monthly price of 35 common grocery items at Jewel-Osco, Mariano’s, Target and Walmart.

Chicago to sell $1B in debt from unpaid fees despite uncertain buyers – Crain’s Chicago Business, February 12, 2026

Chicago is seeking to sell about $1 billion in debt the city is owed from things like unpaid parking tickets even as a top finance official warns the unprecedented offering is expected to be costly with uncertain investor appetite.

Chicago execs plan to boost hiring in 2026, survey finds – Crain’s Chicago Business, February 12, 2026

Chicago executives are bullish and planning to hire — and acquire — even as concerns about economic turbulence and trade wars dominate headlines.

City Council budget bloc moves to monitor Johnson – Crain’s Chicago Business, February 11, 2026

The aldermen who approved the 2026 budget over the objection of Mayor Brandon Johnson are rebranding themselves as the Budget Accountability Coalition and forming working groups to monitor the implementation of their plan.

Neil Bluhm gifts Northwestern Medicine $50M to keep it at forefront of cardiac care – Crain’s Chicago Business, February 11, 2026

Neil Bluhm is putting another $50 million into Northwestern Medicine’s heart program — the one he launched 20 years ago — to ensure it will remain among the nation’s best for decades to come.

Johnson defends exec order directing CPD to investigate federal agents – Crain’s Chicago Business, February 10, 2026

Mayor Brandon Johnson today defended a recent executive order directing the Chicago Police Department to investigate potential crimes committed by federal law enforcement conducting immigration raids in the city.

Gun Violence Down On West Side, But Prevention Groups Say Success Is Threatened By Trump Cuts – Block Club Chicago, February 10, 2026

The city saw major drops in gun violence last year, a trend that was led by two West Side community areas: North Lawndale and South Lawndale. But as local leaders tout the citywide drop in crime, violence prevention leaders say federal budget cuts are threatening the critical work they provide that helped fuel that decline.

OPINION: Chicago creatively repurposing public land – Crain’s Chicago Business, February 9, 2026

The city of Chicago’s ChiBlockBuilder land sale portal shows the city owns more than 40 vacant lots in Morgan Park alone and more than 7,000 throughout the city. There is real opportunity in city-owned public land, but much of it is currently underutilized.

Despite business community concerns, Council committee backs parking enforcement by citizens – Chicago Sun-Times, February 9, 2026

Despite lingering concerns about the impact on business, the City Council’s Committee on Pedestrian and Traffic Safety on Monday approved a newly revised ordinance that would authorize Chicagoans to use their cellphones to provide recorded evidence of bus, bike lane and crosswalk parking violations.

Late Cook County property tax distributions cause trouble for libraries – Chicago Tribune, February 9, 2026

Village library leaders have added their voices to the chorus of complaints about delayed and sporadic distributions of Cook County property tax revenues, saying the situation has drained their reserves, making it harder to hire or buy new books.

Chicago’s aviation chief unveils video of O’Hare’s $1.3B concourse now in the works – Chicago Sun-Times, February 6, 2026

With demand for air travel surging and O’Hare Airport terminals operating at capacity, the traveling public is getting its first glimpse inside a new 19-gate satellite concourse to meet the demand.