With a little over two weeks before a deadline to pass a state budget, Illinoisans suddenly are being made aware of a deeper-than-anticipated shortfall.
In an official report released earlier this week, the governor’s Office of Management and Budget released updated revenue forecasts that leaves the state $536 million worse off than earlier projections showed.
The report lays the blame for these revisions at the feet of the federal government, specifically citing tariffs and uncertainty over funding cuts. It’s true, budgeting and forecasting are much more difficult when you don’t know what the next day will bring. Still, state officials should have anticipated this outcome back in November, when Donald Trump’s reelection signaled a return to protectionist trade policies. He promised tariffs and delivered. The change was foreseeable. And, of course, much of what the state spends is within its own control.
State forecasting should have been more conservative. Late last year, the projected fiscal 2026 shortfall stood at $3.2 billion, shrinking to $1.7 billion by February when Gov. JB Pritzker unveiled his budget. Pritzker’s primary suggestion for cutting costs was to eliminate the state’s expensive program providing health care benefits to immigrants in the country without legal permission, aged 42 to 65, yet another acknowledgement of voter sentiment expressed clearly in November. That would save the state hundreds of millions.
Still, Pritzker’s budget tops $55 billion, over $16 billion more than the $38.5 billion the state spent in fiscal year 2019, just before Pritzker took office.
The temptation among Democratic lawmakers will be to hunt for new revenue. The political problem for them: Pritzker committed not to raise taxes in his budget address.
So where to now? Now would be a good time for the governor, Senate President Don Harmon and House Speaker Emanuel “Chris” Welch to reassure Illinoisans they will do the difficult work that lies ahead without grabbing more of taxpayers’ money.
It’s especially important given rumors cited by Republicans in Springfield that a proposal is under consideration to broaden the state sales tax to apply to many services rather than just goods. Deputy House Minority Leader Ryan Spain, R-Peoria, state Rep. Joe Sosnowski, R-Rockford, and a group of small business owners sounded the alarm at a Wednesday news conference. Spain said he first heard the rumblings Tuesday and that the list of services to be taxed could include streaming, landscaping, hairdressing and building repair work, among many others.
The idea of broadening the sales tax to include services has been discussed in Springfield for ages, and has frequently been laid out as a way to reduce the state’s overall sales tax rate. If lawmakers want to consider such a dramatic change, they should do so in a thoughtful way over a much longer period of time — not in a rush to squeeze additional revenue without time to properly vet the proposal and gather input from affected industries.
Illinoisans and the businesses that have set up shop here can’t be tapped every single time the math doesn’t add up. Given that state spending has ballooned by 43% just in six years, more taxes isn’t the way to plug this year’s budget gap.
