BUDGET/TAXES
Democrats Pass $55.2 Billion Budget
Another year, another budget, and another near-record-breaking spending increase.
Just before midnight on the last day of the legislative session, Illinois House Democrats passed the FY26 budget that will cost taxpayers more than $55.2 billion, a $2 billion increase over last year.
State spending under Governor Pritzker has grown exponentially since he took office in 2019. When he took over as Governor, state expenditures were $40.3 billion. Each year since we have seen state spending grow and we now have a budget that is $15 billion higher than when he took office.
When Governor Pritzker delivered his Budget Address in February, he said, “If you come to the table looking to spend more – I’m going to ask you where you want to cut.”
Unfortunately, that did not hold true. The newly passed budget contains $1 billion in tax hikes and fund sweeps to pay for new spending, as well as pork barrel projects for Democrats.
For several years in a row, the Democrats have negotiated spending plans behind closed doors, excluded Republican input, rejected accountability, and raised taxes on Illinoisans in order to quench their never-ending thirst to spend more money.
House Republicans have repeatedly offered to work to craft a balanced budget without tax hikes, but were once again completely shut out of the process.
Here’s what some of our legislative members are saying:
“Rather than pursuing meaningful structural reforms to secure our state’s future, Democrats chose to prioritize politician pay raises, steal from the rainy-day fund, and funnel money into their own pork projects.” ~ House Minority Leader Tony McCombie
“The tax-and-spend budget passed by Illinois Democrats is completely irresponsible. It’s a $55 billion budget that relies on $1 billion in new taxes, a massive number of fund sweeps, and hundreds of millions of dollars in Road Fund diversions. What’s in this budget? Pay raises for politicians. Nearly $250 million in pork projects for Democratic legislators aka the ‘Democratic Majority Slush Fund’ and an additional $100 million slush fund for the Governor. ~ Deputy House Republican Leader and Republican Budgeteer Norine Hammond
“This budget is a disaster for hardworking Illinois families. A billion dollars in new taxes, hundreds of millions of dollars in Road Fund diversions, and a massive number of fund sweeps are how the Democrats filled the budget hole created by their reckless spending. There’s no property tax relief or tax cuts for working families anywhere to be found in this budget. But Democrats are spending $110 million of our tax dollars on welfare benefits for illegal immigrants. Tax, spend, repeat!” ~ Assistant Republican Leader C.D. Davidsmeyer
$1 Billion in New Taxes and Fund Sweeps
The $55.2 billion budget for Fiscal Year 2026 is reliant on one-time revenues and a billion dollars in tax hikes and fund sweeps.
The Budget and Revenue Package consisted of three major components:
- FY26 Budget Appropriations – SB 2510
- FY 26 Budget Implementation Bill (BIMP) – HB 1075
- FY 26 Revenue Package – HB 2755
Democrats imposed a laundry list of new taxes and money was swept from dedicated funds paid for by user fees to prop up the Democrats’ wasteful spending.
Ultimately, Democratic lawmakers voted to raise their own pay, impose new taxes, and make life in general a lot more expensive for already cash-strapped Illinois taxpayers.
Below is a list of major revenue changes that were included as part of the FY26 budget, which includes tax increases, fund sweeps, pauses in statutory transfers, among other items.
| Revenue Used to Balance the Budget | ||
| Tax Changes | Bill Number | Estimated Value |
| Delinquent Tax Payment Incentive Program | HB 2755 | $228 million |
| GILTI tax treatment of global intellectual property | HB 2755 | $200 million |
| Pause final shift of State sales tax on tor fuel to Road Fund | HB 2755 | $171 million |
| Tobacco/Nicotine products tax hike, including e-cigarettes, pouches | HB 2755 | $79 million |
| Move to “Finnegan” method for interstate income allocations | HB 2755 | $72 million |
| Per-wager tax on Tier 1/Tier 2 sportsbook wagers | HB 2755 | $36 million |
| Telecommunications tax increase ($74m total/$35m – GRF share) | HB 2755 | $35 million |
| Franchise Tax Amnesty | HB 2755 | $5 million |
| Other changes involving motor vehicle use tax and rolling stock | HB 2755 | ??? |
| Subtotal | $826 million | |
| Fund Sweeps and Transfers | ||
| Pause statutory transfers into the Rainy Day Fund (one year) | HB 1075 | $45 million |
| Various Funds swept into new BRIDGE Fund | HB 1075 | $100 million |
| Sweep newly created Prescription Drug Affordability Fund (PBM Bill) | HB 1075 | $140 million |
| Sweep Insurance Producer Administration Fund to GRF | HB 1075 | $20 million |
| Sweep IL Agricultural Loan Guarantee Fund to GRF | HB 1075 | $6 million |
| Sweep Illinois Farmer and Agribusiness Loan Guarantee Fund | HB 1075 | $4 million |
| Subtotal | $315 million | |
| Running Grand Total | $1.141 billion | |
PUBLIC CORRUPTION
Federal Prosecutors Seek 12.5-Year Sentence for Madigan
The federal government is seeking a prison sentence of 12.5 years and a fine of $1.5 million for former Speaker of the House Michael J. Madigan, who was convicted on corruption charges earlier this year. Madigan will face sentencing on June 13.
“The crimes charged and proven at trial demonstrate that Madigan engaged in corrupt activity at the highest level of state government for nearly a decade,” federal prosecutors argued in their sentencing memo. “Time after time, Madigan exploited his immense power for his own personal benefit by trading his public office for private gain for himself and his associates, all the while carefully and deliberately concealing his conduct from detection.”
Madigan’s long-running reign as Speaker of the House ended with his ouster in January 2021 amid a federal bribery investigation. He resigned his legislative seat one month later. Madigan had served in the legislature for more than 50 years, 36 of those years as Speaker. For much of that time, he simultaneously led the Illinois Democratic Party, tightening his stranglehold not just on legislators, but on all Democratic elected officials in Illinois.
“Mike Madigan’s fall from power is no surprise — it’s the bill coming due for decades of corruption,” stated House Republican Leader Tony McCombie after learning of the recommended sentencing. “He betrayed the public trust, lined his pockets, and now faces justice. Illinois deserves better. It’s time to turn the page and end the era of crooked politics for good.”
Republicans continue to call for stronger ethics measures in the wake of Madigan’s conviction.
“No amount of time behind bars can pay back the people of Illinois for the corruption that Mike Madigan poisoned our statehouse with over his decades in power, but I commend federal prosecutors for seeking as strong a sentence as they could,” said Deputy Republican Leader Ryan Spain. “While I won’t hold my breath waiting for it, this should be a message to Democrats in the legislature that it is long past time to fix the ethical loopholes in Illinois government that have eroded public trust.”
“I’ve said more times than I can count, Illinois needs to act on ethics reform, so we can stop relying on federal prosecutors to clean up our mess,” continued Spain. “The time for honest, transparent government in the state of Illinois is now!”
CONSUMERS
Controversial ‘swipe fee’ delayed for one year
In a last-minute move, a massive change being imposed by the State of Illinois on Illinois consumers who use credit cards was delayed for one year. The controversial ‘swipe fee’ law would ban financial institutions that issue credit cards from imposing a fee on the retailers that accept these credit cards for use in Illinois. The law was enacted in May 2024 for implementation this year.
For complex legal reasons, this ‘swipe fee’ law is entangled with the transactions on which an Illinois State sales tax is collected. This would create a complex and snarled situation in which a transaction could be fee-imposed and taxed in two separate categories depending on the sales tax applicability of each transaction. An especially ugly scenario arose with respect to food service transactions, where it appeared likely that implementation of the controversial ‘swipe fee’ law could require many Illinois consumers who use their credit cards at table-service restaurants to run their cards twice, once for the meal and once for the service fee or tip paid to personnel. The action by the Illinois General Assembly to delay implementation of the ‘swipe fee’ does not make this law go away; its implementation has been ‘paused’ for one year. This debate will continue into the 2026 spring session.
TRANSPORTATION
No Action Taken on Chicagoland Mass Transit Crisis
With public transit agencies in Chicagoland facing a fiscal cliff and the potential for thousands of layoffs, the state did not pass a bill that would have provided the agencies with potentially over $1 billion in new funding.
A version of the bill passed in the Senate, sponsored by Sen. Ram Villivalam, D-Chicago. But the House adjourned early Sunday morning without voting on it, as some of its tax hikes became too controversial. Now, the future of Chicagoland transit is in limbo as the bill awaits further action.
The Regional Transportation Authority — which oversees the Chicago Transit Authority, Metra commuter rail and Pace Suburban Bus — projects a $771 million annual operating budget shortfall.
At a hearing in the days leading up to adjournment, Amalgamated Transit Union political director Clem Balanoff told lawmakers that thousands of union bus drivers and train operators would be laid off if action wasn’t taken to fill the budget gap. RTA officials have estimated 40% service cuts are necessary to address the fiscal crisis. […]
The Senate’s proposal to do so included statewide taxes on deliveries and electric vehicle charging, as well as expanding taxes on rideshares and expanded certain Chicago taxes to the rest of Cook County and surrounding counties.
RTA and its subsidiary transit agencies will create their budgets for the upcoming fiscal year in the coming weeks. According to RTA spokesperson Tina Fassett Smith in a statement, those budgets “by law must only include funding we are confident the system will receive in 2026.”
Between the governance and the revenue portions – the transit system’s fiscal cliff is approaching. A wide variety of major decisions as to how public transit is run, how it can be reformed, and ultimately how it can serve residents better remain since nothing was done this session.
Transit reform is something that lawmakers must address. House Republicans can get on board with the governance piece, but any revenue increase to pay for it will be an extremely hard sell, especially in this difficult budget climate.