Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
As we move into the month of March, action in Springfield begins to pick up. House Speaker Emanuel ‘Chris’ Welch has announced the creation of a property tax relief working group and a pensions reform working group. We’ll stay tuned to see what the latest findings and recommendations are, if any.
Additionally, state budget projections and strategy continue to evolve.
*Government Affairs Roundup brought to you by CITGO*
Illinois Lawmakers Divided on Tax Revenue Strategy
Illinois lawmakers remain split on how to generate tax revenue for the state budget, with Democrats advocating for what they call “progressive revenue” and Republicans emphasizing organic economic growth.
Democratic Push for Closing Corporate Loopholes
During a press conference with the Illinois Revenue Alliance last Wednesday, State Rep. Will Davis, D-Hazel Crest, argued for closing corporate tax breaks to increase state revenue. He clarified that the proposal does not involve broad tax hikes.
“Corporate loopholes are not taxes. They’re just creating a space where, instead of the tax breaks that corporations get to operate, we’re shutting some of those down so that we can keep more of that money in our state coffers,” Davis said.
State Sen. Karina Villa, D-West Chicago, echoed this sentiment, claiming that eliminating corporate loopholes would benefit workers. “Our billionaires have all these loopholes to be able to make more money on the shoulders of us, on the shoulders of the working class,” Villa said.
The Illinois Revenue Alliance estimates that closing these loopholes could generate $6 billion in additional revenue for the state.
Republican Focus on Economic Growth and Business Incentives
On Thursday, Republican lawmakers countered the Democratic approach, arguing that fostering a business-friendly environment would naturally increase tax revenue.
State Rep. Brad Stephens, R-Rosemont, warned that additional business regulations and taxes could drive companies out of Illinois. “Somebody’s going to make a decision on where they want to locate their business, and if we become more and more business-unfriendly, it’s not going to be Illinois,” Stephens said.
State Rep. Kevin Schmidt, R-Millstadt, emphasized the importance of job creation as a means to grow the state’s revenue. “When you create jobs, you’re going to create more tax revenue. If we grow the state and grow the economy organically, we’ll bring in more taxes, and it’s a win-win for everyone,” Schmidt said.
To support business growth, Republicans introduced a package of proposals, including eliminating taxes on tips, waiving first-year business license fees, increasing education expense tax credits to $1,500, and providing tax credits for donations to scholarship programs.
As budget negotiations continue, the debate over tax policy and economic strategy is expected to remain a key issue in Springfield.
State Legislature Projects $737 Million Less in Revenue than Governor’s Budget
Illinois lawmakers are projecting lower revenue estimates for the upcoming fiscal year than Governor Pritzker, raising concerns about available funding as budget negotiations approach.
On Tuesday, the General Assembly’s bipartisan Commission on Government Forecasting and Accountability (COGFA) released its fiscal year 2026 revenue projection, estimating $54.2 billion in revenue. That figure is $1.2 billion less than Pritzker’s proposed $55.5 billion budget. However, after accounting for the governor’s proposed revenue adjustments, the gap between his office and COGFA narrows to $737 million.
COGFA officials urged a conservative approach, citing economic uncertainties. “With all the uncertainty that’s been talked about, it’s best to have more of a cautious approach,” said COGFA Revenue Manager Eric Noggle.
The commission also revised its outlook for the current fiscal year, projecting Illinois will end FY 2025 with $53.6 billion in revenue—$333 million more than lawmakers initially budgeted but still $286 million below estimates from the Governor’s Office of Management and Budget (GOMB).
COGFA’s report highlighted concerns about the volatility of key revenue sources. While personal income tax receipts are expected to exceed budgeted levels by 4.6%, corporate income taxes are projected to fall 12% below expectations, and sales tax revenue is anticipated to be 3.3% lower than estimated.
The discrepancy between projections has intensified the debate over Illinois’ fiscal policies. Republicans argue Pritzker’s budget relies on unrealistic revenue expectations to avoid making tough spending cuts. “This means he and his Democratic allies will either have to cut spending, increase taxes, or both,” said Sen. Don DeWitte, R-St. Charles, a COGFA member. “It is time for the governor to take a break from the national stage and focus on the dire financial situation he has created by irresponsible spending in our state.”
In response, Pritzker’s office defended its estimates, stating they are based on the latest data from outside firms like S&P Global. A spokesperson for the governor also criticized federal policies, blaming economic uncertainty on Republican-led initiatives. “As COFGA itself says in the report, the Trump Administration and Republicans in Congress are imposing tariffs as a tax on working families, giving tax cuts to the wealthiest Americans, and mishandling geopolitical relations that are creating national economic uncertainties,” the spokesperson said.
COGFA officials cautioned that economic factors could significantly impact revenue projections in the coming months. The commission plans to revisit its estimates in May, ahead of the May 31 budget deadline.
A February report from S&P Global downgraded its economic outlook, projecting 2% GDP growth—lower than previous forecasts—as well as rising unemployment in 2025 and 2026. COGFA Chief Economist Ben Varner also noted that Trump’s recently announced tariffs are slightly higher than those factored into S&P’s modeling.
GOMB Director Alexis Sturm told lawmakers that April income tax receipts could provide a clearer picture of the state’s financial outlook. “Our focus really needs to be on how much income tax is going to perform heading into FY26,” Noggle added, emphasizing that Illinois’ revenue structure heavily depends on income tax collections meeting expectations.
Pritzker’s proposed $55.2 billion budget is based on a December S&P Global forecast that anticipated stable economic growth while accounting for potential policy changes, including tariffs and tax cut extensions.
With economic uncertainties looming and competing revenue projections on the table, Illinois lawmakers face a critical challenge in finalizing the state’s budget in the coming months.
Illinois Municipalities Move to Reinstate Grocery Tax, Push for Expanded Taxing Authority
As Illinois prepares to eliminate its 1% state grocery tax next year, dozens of municipalities are opting to reinstate the tax at the local level, with many more expected to follow suit.
Governor JB Pritzker has promoted the tax repeal as a major win for Illinois families, highlighting it in his recent budget address. “We lowered taxes on parents when we enacted the Child Tax Credit and permanently eliminated the state grocery tax—together saving Illinoisans more than half a billion dollars per year,” Pritzker said. However, the state is allowing municipalities to reinstate the tax locally beginning in January 2026, raising concerns over lost revenue for cities and towns.
With the state’s grocery tax set to expire, local governments are assessing how to offset the anticipated loss of revenue. According to the Illinois Municipal League, cities and towns collectively stand to lose between $325 million and $350 million in annual funding. For example, suburban Arlington Heights could lose $1.3 million, Bolingbrook $1.75 million, Geneva $600,000, and Joliet $3 million. In Chicago, the impact could be as high as $80 million.
While nearly 60 municipalities have already voted to implement a local grocery tax, Illinois Municipal League CEO Brad Cole expects that number to grow significantly after the April 1 municipal elections. Local governments must notify the Illinois Department of Revenue by October 1 if they wish to impose the tax beginning in 2026; otherwise, the next opportunity would be July 2026.
Rather than reinstate the grocery tax, some municipalities are exploring alternative revenue streams. In Champaign, for instance, officials opted to increase the city’s general sales tax starting in 2026 instead of implementing a 1% grocery tax. Because Champaign is a home-rule municipality, it has greater flexibility in imposing taxes without state approval.
Chicago, another home-rule city, has yet to decide on replacing the state grocery tax with a local version. Mayor Brandon Johnson has not publicly stated his position, but given the city’s budget constraints, absorbing a potential $80 million revenue loss would be difficult.
Beyond the grocery tax, municipalities are advocating for expanded taxing powers to help fund local infrastructure projects. The Illinois Municipal League is lobbying for all non-home rule municipalities to have the authority to impose a local motor fuel tax. Currently, only non-home rule municipalities in Cook County or those with populations over 100,000 can levy a local gasoline tax of up to 3 cents per gallon under House Bill 1283.
Matteson Village President Sheila Chalmers-Currin, a vice president of the Illinois Municipal League, emphasized the challenges non-home rule municipalities face. “The majority of non-home rule municipalities across Illinois lack this authority,” she said, explaining that Matteson had to undergo a lengthy process to achieve home-rule status just to implement local taxes.
Chalmers-Currin argued that granting broader taxing authority would reduce financial disparities among municipalities and provide critical funding for road repairs and infrastructure improvements. “Being able to tax gas gives communities an alternative to raising property taxes,” she added.
Cole reinforced this point, noting that local leaders are held accountable for road maintenance. “When citizens call about potholes or infrastructure issues, they expect mayors and alderpersons to address them. Non-home rule communities often lack the resources to do so,” he said.
Alongside efforts to expand local taxing authority, the Illinois Municipal League is also pushing for changes to public notice requirements. The organization is lobbying the General Assembly to allow municipalities to post certain public notices online instead of in newspapers or by mail, a move that could reduce costs but would also impact struggling media outlets.
As local governments navigate these financial challenges, municipalities are weighing their options, from reinstating the grocery tax to advocating for broader taxing authority. With significant revenue losses looming in 2026, the debate over local taxation is set to intensify in the coming months.
Lawmakers Press Transit Leaders as RTA Funding Crisis Looms
Illinois lawmakers are pressing mass transit leaders for solutions as Chicago’s public transportation system faces a looming financial crisis. With federal pandemic relief funds set to expire, Metra, the Chicago Transit Authority (CTA), and Pace—under the oversight of the Regional Transportation Authority (RTA)—are staring at a $771 million shortfall in 2026. Without additional funding, transit officials warn that services could be slashed by up to 40%.
During a tense House hearing this week, lawmakers criticized transit agencies for their lack of planning and operational inefficiencies. Many made it clear that additional state funding will not come without major structural reforms.
In one of the most heated exchanges, Rep. Rita Mayfield, D-Waukegan, lashed out at RTA Chair Kirk Dillard, calling for a complete overhaul of the agency. “I think that we need to blow up the RTA, totally blow it up, get rid of everyone, because again, systemic incompetence for the last 50 years,” Mayfield said. “I don’t want to keep anyone other than the janitors and the basic clerical staff. Anybody in a leadership position needs to be removed.”
Other lawmakers acknowledged the need for regional oversight but agreed reforms are long overdue. “I believe that we need this regional oversight,” said Rep. Mary Beth Canty, D-Arlington Heights, a former RTA board member. “My frustration has always come from a place of us not being able to get that in a meaningful way.”
Several plans have been proposed to overhaul Chicago’s transit system. Dillard is advocating for giving the RTA more authority over fare structures, service coordination, and operational oversight. His plan includes a unified fare app and a system where the RTA would require transit agencies to meet performance benchmarks in exchange for funding. The RTA has also identified $100 million in potential efficiencies.
“We’re not asking just for money,” Dillard said. “We have presented significant reforms that will be there.” However, some lawmakers remain skeptical. “I will never vote to give you more anything, definitely not more power or more money, because I’ve not seen anything good come out of the RTA,” Mayfield countered.
Other proposals include an AFL-CIO-backed plan to reduce the required percentage of transit funding that must come from rider fares and improve coordination between agencies. Additionally, Sen. Ram Villivalam, D-Chicago, has introduced a bill to consolidate all transit agencies into a single entity called the Metropolitan Mobility Authority.
One major challenge in addressing the shortfall is determining how state resources should be allocated. Illinois provides about 17% of transit funding, far less than other states with similar-sized systems. Pennsylvania, for example, funds half of Philadelphia’s public transit costs, while other major cities receive at least a quarter of their funding from the state.
CTA Chief Financial Officer Tom McKone argued that the CTA, which serves 86% of the region’s transit riders, should receive a greater share of available funding. However, some lawmakers pushed back. “If we can’t take care of what we have already, how the hell are we going to expand into anything?” asked Rep. John Cabello, R-Machesney Park. “It just doesn’t make sense.”
Beyond funding, transit agencies remain divided on governance reforms. CTA Acting President Nora Leerhsen dismissed consolidation efforts, arguing they would add administrative burdens without addressing service inefficiencies. “This issue, in our opinion, is not from a governance issue,” Leerhsen said. “Consolidation would bring additional administrative burdens that would, in fact, exacerbate some of the inequities that we’ve seen.”
Metra CEO Jim Derwinski also expressed concerns, noting that Metra operates under complex agreements with freight rail companies that limit its ability to coordinate services independently.
While lawmakers and transit leaders continue to debate structural changes, the most pressing issue remains the $771 million funding gap, which is expected to grow in subsequent years.
Gov. JB Pritzker’s proposed $55.2 billion state budget includes just a 1% spending increase across most agencies and does not allocate new funds for mass transit. The governor acknowledged the challenge but said budget negotiations will determine any state contribution.
“Who’s covering how much of that is a negotiation that will take place,” Pritzker said. “So it’s near impossible for us to put a number into a budget when we don’t yet know.”
The Chicago Metropolitan Agency for Planning has suggested several funding options, including increasing the RTA sales tax, imposing new sales taxes on services, raising tolls, or implementing higher vehicle registration fees and downtown parking taxes.
Illinois Lawmakers Push for Major Expansion in Energy Storage
Illinois lawmakers are advocating for a significant expansion in battery storage, arguing that it could help stabilize electricity prices and prevent power shortages as demand rises. This week, State Sen. Bill Cunningham and Reps. Marcus Evans and Barbara Hernandez introduced new legislation aimed at accelerating the state’s energy storage capacity. The bill, backed by clean energy organizations such as the Solar Energy Industries Association and the American Clean Power Association, would require the Illinois Power Agency to procure 15 gigawatts of energy storage by 2035—enough to power approximately 12 million homes.
If enacted, the measure would nearly double last year’s proposal and match California’s energy storage mandate, despite Illinois using half as much electricity as the West Coast state.
Lawmakers and clean energy advocates argue that increasing battery storage is crucial to ensuring grid reliability, particularly as Illinois transitions away from fossil fuels. The push comes as experts warn of potential electricity shortages later in the decade, making energy storage a key component of the state’s long-term power strategy.
With growing concerns over energy reliability and affordability, the proposal is expected to be a focal point in legislative discussions on Illinois’ energy future.
Illinois Lawmakers Push for First-Time Homebuyer Savings Accounts and Property Tax Relief
With housing costs continuing to rise, Illinois lawmakers are considering new measures to help first-time homebuyers save for a down payment while also exploring property tax relief options for homeowners.
Senate Bill 148, introduced with the backing of Illinois Realtors, would create a special savings account program designed exclusively for purchasing a single-family residence. Under the proposal, deposits into these accounts would be deductible from state income taxes, with certain limitations.
The deductions would be capped at:
- $5,000 per year for individuals
- $10,000 per year for joint accounts
- A lifetime maximum of $25,000 per individual and $50,000 for joint accounts over a 10-year period
Eligibility would extend to Illinois residents who have not owned a single-family home in the past 10 years, including both first-time buyers and “second chance” buyers looking to reenter the housing market.
State Sen. Christine Castro, D-Elgin, highlighted the urgency of addressing housing affordability, noting that the median sales price of a home in Illinois reached nearly $300,000 in 2024, an 8% increase from 2023 and a 40% jump since 2019. “This rapid rise in home prices is making it more difficult for Illinois residents to achieve homeownership,” Castro said at a Thursday news conference.
Jim Clayton, senior director of state government affairs for Illinois Realtors, emphasized that SB 148 is part of a broader effort by the real estate industry to ease the financial strain on prospective homeowners. The bill has been assigned to the Senate Revenue Committee and is awaiting further action.
Meanwhile, Senate Republicans are advocating for measures to curb rising property taxes, arguing that Gov. JB Pritzker’s recent budget proposal failed to adequately address the issue.
“He talked about affordable housing,” said Sen. Jil Tracy, R-Quincy, during a Statehouse news conference. “And yes, that’s very necessary. But first-time homebuyers are struggling not just with purchasing a home but also with affording property taxes. You can’t address housing affordability unless you tackle Illinois’ high property tax rates.”
One such proposal, Senate Bill 2246, sponsored by Sen. Chapin Rose, R-Mahomet, would cap increases in residential property assessments to the rate of inflation over the previous 12 months. Rose argued that rising assessments are creating financial hardships, especially for seniors on fixed incomes.
“This is real, this is hurting people, and it’s all scalable,” Rose said. “Whether you own a $100,000 home or a $400,000 home, property taxes are becoming unaffordable.”
SB 2246 has not yet been assigned to a committee, but discussions around property tax relief are expected to remain a focal point in this legislative session.
As lawmakers consider these proposals, the debate over how best to address Illinois’ housing affordability crisis continues, with Democrats and Republicans offering different approaches to easing the financial burden on homeowners.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
[email protected]
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