Illinois lawmakers closing in on $56B budget deal backed by gas tax windfall and some election-year tax breaks

https://ift.tt/Dhsx3Kf

  • State representatives work in the House chamber during the spring...

    State representatives work in the House chamber during the spring legislative session at the State Capitol on May 31, 2026, in Springfield. (John J. Kim/Chicago Tribune)

1 of 21

State representatives work in the House chamber during the spring legislative session at the State Capitol on May 31, 2026, in Springfield. (John J. Kim/Chicago Tribune)

Expand

SPRINGFIELD — Illinois lawmakers and Gov. JB Pritzker were working through the weekend ahead of a Sunday deadline to finalize a nearly $56 billion election-year state spending plan that would be balanced, in part, with an anticipated windfall of sales tax revenue resulting from soaring gas prices.

Pritzker and fellow Democrats are building their November general election campaigns around the issue of affordability, blaming Republican President Donald Trump and his allies for cuts to social programs and for rising prices on necessities — most notably gasoline, which has jumped from an average of about $2.91 per gallon in Chicago to $4.82 since the Iran war began in late February.

But higher prices also mean more revenue for the state. Illinois collects a 6.25% tax on gas sales, and Democrats are moving to divert $150 million of that windfall — money that otherwise would flow to mass transit — to help fund day-to-day state operations and stave off cuts to social services and other programs.

Still, lawmakers in their 3,551-page spending plan included a 3.2% cost-of-living increase for themselves, boosting base salaries for all 177 members of the General Assembly to $101,450. That automatic, inflation-based increase breaks the six-figure salary mark for the part-time positions for the first time in Illinois history.

State Rep. Robyn Gabel sits with colleagues at a House executive committee hearing on the budget bill during the spring legislative session at the State Capitol, May 31, 2026, in Springfield. (John J. Kim/Chicago Tribune)
State Rep. Robyn Gabel sits with colleagues at a House Executive Committee hearing on the budget bill during the spring legislative session at the Illinois State Capitol on May 31, 2026, in Springfield. (John J. Kim/Chicago Tribune)

Salaries for the governor, other statewide elected officials and the heads of state agencies also would increase by about 3.2%, though Pritzker, the billionaire businessman and heir to the Hyatt Hotels fortune, does not take a salary. Lawmakers’ district office allowances would also see a funding boost, though pay for Springfield staff was expected to remain flat, House Democratic Leader Robyn Gabel of Evanston said at a hearing on the budget Sunday afternoon.

The Democratic plan calls for overall spending of about $55.9 billion from the state’s all-purpose checking account during the budget year beginning July 1, with an anticipated year-end surplus of about $100 million.

State Sen. Elgie Sims, center, answers questions from fellow Sen. Chapin Rose as the appropriations committee holds a hearing to discuss the budget during the spring legislative session at the State Capitol, May 31, 2026, in Springfield. (John J. Kim/Chicago Tribune)
State Sen. Elgie Sims, center, answers questions from fellow Sen. Chapin Rose as the appropriations committee holds a hearing to discuss the budget during the spring legislative session at the Illinois State Capitol in Springfield on May 31, 2026. (John J. Kim/Chicago Tribune)

“No tax increases on everyday working families,” state Sen. Elgie Sims, a Chicago Democrat and lead budget negotiator, told members of the Senate Appropriations Committee during a Sunday morning hearing. “In fact, everyday working families, as a result of this budget, will see their lives get easier. We’re making investments in those individuals who are … impacted by the cuts coming down from the federal government.”

By Sunday afternoon, final budget details still were being negotiated, portending a long night ahead in Springfield.

The budget plan, the eighth since Pritzker first took office, comes as he seeks a rare third term and as Democrats look to maintain their dominance in the General Assembly. It includes a re-up of some election-year tax breaks they used last time the governor was on the ballot in 2022.

Those include pausing an inflation-based increase of a separate per-gallon gasoline tax — which otherwise would go up by 1.3 cents, to 49.6 cents per gallon, on July 1 — and a 10-day “sales tax holiday” for back-to-school shoppers.

Republicans in the legislature’s superminority criticized the Democratic framework for not going far enough to soften the blow of high gas prices while continuing to fund programs and services the GOP has long opposed. 

State Sen. Chapin Rose, left, asks questions about the budget bill as the appropriations committee holds a hearing during the spring legislative session at the State Capitol, May 31, 2026, in Springfield. (John J. Kim/Chicago Tribune)
State Sen. Chapin Rose, left, asks questions about the budget bill as the appropriations committee holds a hearing during the spring legislative session at the State Capitol on May 31, 2026, in Springfield. (John J. Kim/Chicago Tribune)

Temporarily sparing drivers from a 1.3-cent-per-gallon increase in the gas tax won’t result in significant savings, GOP Sen. Chapin Rose of Mahomet said, especially when Democrats are using a glut of revenue from a separate tax on gas sales to balance their spending plan.

“We ought to be suspending the sales tax on motor fuel right now, not diverting it to the general revenue fund,” Rose said.

Instead, Rose — a top Republican budget negotiator — said he’d rather see cuts in a similar amount of spending for immigrant services, in order to “give people their surplus in sales tax back.”

Spending on elementary and secondary education would increase by $350 million, meeting the minimum required under a 2017 school funding overhaul and restoring funding for a property tax relief grant program that was suspended for the current budget year. Pritzker had proposed continuing that freeze when he laid out his budget blueprint in February. 

While meeting its minimum obligation for K-12 schools under the state’s so-called evidence-based funding formula, the budget would continue to underfund transportation grants to local school districts, including for special education students.

The spending plan, much of which stuck closely to Pritzker’s February proposal, would fund the state’s full required pension payment of $11.2 billion from the general fund, though fiscal watchdogs have long warned that those payments are insufficient to address the state’s gaping unfunded pension liabilities of about $144 billion.

Democrats said their plan would result in no layoffs of state employees and no closures of prisons or other state facilities. Neither would it fund the creation of many new large-scale programs.

It includes more than $100 million in additional funding to hire 100 new correctional officers and administrative staff for the state’s prisons, in line with the governor’s proposal, with the goal of reducing overtime hours.

Public universities and community colleges would see $16 million in additional state operating dollars, a 1% increase. Funding for the grants to lower-income students through the Monetary Award Program would remain flat at nearly $722 million.

One major new program is a $70 million plan to direct food assistance to Illinois residents who are booted from the main federal food aid program due to new requirements the Trump administration says will crack down on benefits fraud.  

Under the state program, one-time payments of $400 would automatically go out to people who lost benefits due to new federal work requirements. Last year, Trump signed into law a sweeping Republican-led package that expanded work requirements for receiving benefits from the Supplemental Nutrition Assistance Program, or SNAP, to previously exempt groups such as adults ages 55 to 64.

“We are facing a crisis. There are over 100,000 individuals who will lose SNAP benefits as a result of a hostile federal government, but we are responding directly to those challenges,” Sims said at Sunday’s hearing.

Republicans in the state Senate questioned the merits of payouts to people who have not met a federal requirement.

State Sens. Chapin Rose, left, and Donald DeWitte, right, look over the budget bill as the appropriations committee holds a hearing during the spring legislative session at the State Capitol, May 31, 2026, in Springfield. (John J. Kim/Chicago Tribune)
State Sens. Chapin Rose, left, and Donald DeWitte, right, look over the budget bill as the appropriations committee holds a hearing during the spring legislative session at the State Capitol on May 31, 2026, in Springfield. (John J. Kim/Chicago Tribune)

“Let’s find out why they no longer qualify before we decide to start handing out the $400 individual payment,” said Sen. Donald DeWitte, a St. Charles Republican.

DeWitte also noted the state faces a potential $700 million penalty in future years under Trump’s tax-and-spending package if Illinois does not achieve a higher level of payment accuracy. The vast majority of states at the time the federal law was passed did not meet the so-called error rate needed to avoid a penalty.

One of the major sticking points for Democrats in budget negotiations had been how aggressively to pursue new taxes to prevent spending freezes and cuts in what Pritzker had pitched as a “maintenance” budget.

Progressive lawmakers and their allies were unsuccessful in winning support for another attempt to ask voters to amend the state constitution to allow higher incomes to be taxed at higher rates, an effort that failed at the ballot box in 2020.

But progressives did succeed in the waning days of the spring legislative session in gathering enough support among more centrist Democrats for other revenue measures that would not directly affect average taxpayers. 

A demonstrator holds a sign referencing corporations that make money through the sale of peoples' personal data before a rally held by several groups under the umbrella organization Illinois Revenue Alliance at the State Capitol during the spring legislative session on May 27, 2026, in Springfield. (John J. Kim/Chicago Tribune)
A demonstrator holds a sign referencing corporations that make money through the sale of peoples’ personal data before a rally held by several groups under the umbrella organization Illinois Revenue Alliance at the State Capitol on May 27, 2026, during the spring legislative session in Springfield. (John J. Kim/Chicago Tribune)

Some proposals, including taxes on targeted digital advertising and prediction markets, appeared likely to be included in the final package but without any projected revenue factored into the spending plan, given uncertainty over their legality and revenue-generating potential. The revenue measure would also create a new 15% tax on post-payout revenue for companies that operate fantasy sports contests and grant the Illinois Gaming Board licensing authority over those companies.

Beyond the gas sales tax diversion, the plan also calls for a one-year shift of $79 million in tax revenues from sales of candy, soft drinks and grooming products — money that otherwise would go to capital construction projects to the operating budget. It also relies on $200 million in new revenue from a Pritzker-proposed per-user tax on large social media companies. 

The package also counts on $300 million in revenue from extending a cap on how much corporations can deduct from their state taxes for operating losses.

Chicago Tribune’s Jeremy Gorner and Jack O’Connor contributed.

Top Feeds,Politics

via Politics https://ift.tt/yqoQ7j8

May 31, 2026 at 07:03PM

Leave a comment