Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
Today’s highlights include yet another forecast for the state budget and on the federal side, a tax bill full of President Trump’s priorities. See below for more information along with additional updates on property tax, education funding, and tipped wage.
*Government Affairs Roundup brought to you by CITGO*
Weekly State Budget Update
The Governor’s Office of Management and Budget (GOMB) has lowered its revenue forecast for the upcoming fiscal year by approximately $500 million, creating new challenges for the General Assembly as it works to craft a balanced budget. GOMB now projects $54.9 billion in revenue for the fiscal year starting July 1—down from its previous estimate of $55.5 billion.
Key drivers of the decline include a $351 million drop in projected corporate income tax revenue due to lowered expectations for corporate profits, and a $289 million reduction in individual income tax revenue stemming from weaker forecasts for employment, wage growth, and stock market performance.
Additional shortfalls include $150 million less in anticipated sales tax revenue and a $70 million decrease in expected federal funding. These losses are partially offset by higher-than-expected interest income, as the Federal Reserve has delayed cutting interest rates.
The governor’s office placed blame on former President Donald Trump and congressional Republicans for contributing to the state’s economic uncertainty.
“This year has brought an unprecedented set of challenges, as Donald Trump and Elon Musk push efforts that would strip Illinois of vital tax dollars and deny residents the services and protections they depend on,” said Deputy Governor Andy Manar in a statement.
“The downward revision of the state’s revenue estimate is largely driven by economic instability fueled by the Trump administration and Republicans in Congress. Their reckless policies have already led to the first quarterly decline in U.S. GDP in three years and are increasing costs for working families. This national uncertainty threatens Illinois’ economic progress and future outlook,” Manar added.
Governor J.B. Pritzker has indicated he does not plan to raise taxes to address the shortfall. Instead, he and the GOMB will work with lawmakers to produce a balanced budget that maintains fiscal stability while protecting critical services.
Manar reaffirmed the administration’s priorities, which include building up the state’s rainy-day fund, strengthening pension funding, and maintaining investments in education, healthcare, and other essential services.
Illinois Dominates List of Cities with Highest Property Tax Rates in U.S.
Illinois is home to four of the five U.S. metro areas with the highest property tax rates, according to a new study released April 16 by Attom, a nationwide property data provider.
Leading the list is Rockford, where homeowners paid an effective property tax rate of 2.06% of their home’s market value in 2023. It’s followed closely by Chicago (1.91%), Peoria (1.89%), and Champaign-Urbana (1.88%). Springfield (1.82%) ranked sixth, meaning half of the 10 highest-taxing metro areas in the country are in Illinois.
The national average effective property tax rate, according to Attom, is 0.86%—less than half the rate paid in many Illinois communities. The only metros in the top 10 not in Illinois were in New Jersey (2), Connecticut (2), and Pennsylvania (1). Notably, the study excluded data from New York.
What’s Driving Illinois’ High Property Taxes? Despite repeated public frustration and various legislative attempts to reform the tax system, Illinois’ high property taxes have deep structural causes, most notably, pension debt.
“The main reason we have above-average taxes in Illinois is that we pay over $11 billion in interest on unfunded pension obligations,” said Maurice Scholten, president of the Taxpayers Federation of Illinois. “Other states don’t have this kind of collective debt adding to their taxes.”
In 2023, Illinois had the lowest pension funding ratio in the country, with only 51% of its pension obligations funded, according to pension research group Equable. By comparison, New Jersey, another high-tax state, was slightly better off at 56% funded. Because police, fire, and school pensions are often funded through property taxes, that pension debt translates directly into higher tax bills for homeowners.
The issue has prompted multiple proposals in Springfield. In February, a southern Cook County legislator introduced a bill calling for an exploration of alternatives to the property tax system, in place since the early 1900s. Separately, a group of lawmakers from western Illinois proposed eliminating property taxes for homeowners who have lived in and owned their homes for at least 30 years. But experts say such proposals don’t address the underlying pension-related debt fueling the problem.
While Illinois’ tax rates are among the highest, the actual dollar amounts paid are somewhat tempered by relatively modest home values. For instance, in Rockford, the median home value is about $217,600, meaning the average annual property tax bill is approximately $4,490—ranking only 63rd nationally in terms of dollar amount. In Chicago, where the median home value is around $408,000, the average tax bill is $7,788. That drops Chicago from second place in tax rates to 13th when comparing actual tax bills.
Compare that with San Jose, California, where the average tax bill is the nation’s highest at roughly $12,760. Despite a low effective tax rate of just 0.60%, the area’s sky-high home values—around $2.12 million—drive the large bills.
Experts warn that Illinois’ high property tax burden has long-term economic consequences. “It’s a drag on our economy,” Scholten said. “Every dollar that homeowners pay to property taxes is one less dollar they can spend in their community, at stores and restaurants.”
Until Illinois addresses its massive pension debt, he added, residents will likely continue to shoulder some of the highest property tax burdens in the nation.
Federal Judge Restores $77M in Education Funding to Illinois
Illinois has regained access to over $77 million in federal education funds after a federal judge temporarily halted an effort by the Trump administration to rescind unspent pandemic relief dollars.
On Tuesday, U.S. District Judge Edgardo Ramos of the Southern District of New York issued a preliminary injunction preventing the U.S. Department of Education from enforcing a directive that would have immediately cut off access to hundreds of millions in unspent education relief funds nationwide.
At stake for Illinois was $77.2 million in federal funding previously earmarked under the American Rescue Plan Act (ARPA). The funds were part of a broader $5 billion allocation designed to help public schools recover from the COVID-19 pandemic. They had already been committed to initiatives such as teacher mentoring, principal training, trauma support services, technology infrastructure upgrades, and social-emotional learning programs.
The federal funds were initially set to cover expenditures incurred through September 2023, with legislation later extending the obligation deadline to September 2024. Further regulatory allowances permitted states to draw down funds through March 2026, with Illinois receiving such an extension in January.
However, in a sudden reversal, Education Secretary Linda McMahon issued a March 28 memo revoking these extensions, citing the conclusion of the pandemic and a need to align with updated departmental priorities. The move would have frozen unspent—but previously committed—education funds across multiple states, including Illinois.
Illinois Attorney General Kwame Raoul, along with counterparts from 17 states, filed suit against the Department of Education, calling the action “shortsighted and illegal.” The court sided with the states, at least for now, issuing a ruling that preserves access to the funds while litigation continues.
For business and civic leaders, the ruling protects not only local education initiatives but also broader economic recovery efforts. Many of the affected programs, especially those tied to workforce readiness, technology, and educator development—have downstream impacts on talent pipelines and long-term regional competitiveness.
According to Maurice Scholten, president of the Taxpayers Federation of Illinois, “Preserving these funds ensures that already-committed investments in educational infrastructure and workforce development can proceed without disruption.”
While the court’s ruling provides temporary relief, the final fate of the funds will depend on the outcome of ongoing litigation. For now, however, Illinois schools—and the communities and businesses that depend on a strong education system—can move forward with critical post-pandemic recovery plans.
Efforts Move Forward to End Tipped Wage as D.C. Moves to Reverse Course
As Illinois lawmakers weigh a statewide elimination of the tipped minimum wage, a significant reversal in Washington, D.C. is adding fuel to the debate.
Washington, D.C. Mayor Muriel Bowser announced support for repealing a law that requires restaurants to pay tipped workers the full minimum wage, citing deep concerns about the policy’s economic fallout. The decision comes just months after D.C. fully implemented the “One Fair Wage” initiative.
“D.C. restaurants are facing a perfect storm, from increased operating and supply costs to higher rents and unique labor challenges,” Bowser said in a statement. “We must rebalance our system to ensure local restaurants can survive, compete, and employ D.C. residents.”
In Chicago, which began phasing out the tipped wage in 2023, city leaders remain committed to the change. Mayor Brandon Johnson recently defended the policy, saying it has helped stabilize a historically marginalized workforce.
“For many of those workers, particularly Black and brown women, there hadn’t been stability or continuity,” Johnson said on Tuesday. “This reform is about equity and creating sustainable employment.”
Illinois legislators are now considering extending the tipped wage phase-out statewide, following Chicago’s lead. But the proposal is facing growing resistance. The Illinois Restaurant Association has voiced strong opposition, warning that eliminating the tipped wage would increase operating costs, forcing restaurants to raise menu prices—a move that could drive customers away and hurt business viability.
Critics are pointing out D.C.’s recent experience as a cautionary tale. “This should be a flashing red warning sign for the rest of the country, especially Illinois,” said Rebekah Paxton, research director at the Employment Policies Institute, a nonprofit focused on labor and employment policy. “Chicago has already lost 5,000 jobs or more, according to the best available data. We’re also seeing a rise in service fees—clear signs of stress in the hospitality sector.”
Paxton and others argue that while the intention of wage reform is laudable, the unintended consequences—such as restaurant closures and job losses—are already becoming evident.
The call for repeal in D.C. came after a six-hour city council hearing, during which numerous tipped workers voiced opposition to the new law, arguing that it had reduced their take-home pay and made restaurant employment less attractive. Despite the backlash, proponents of D.C.’s One Fair Wage policy continue to call it a success, citing long-term benefits to wage equality and worker protection.
However, the D.C. reversal underscores a broader tension playing out nationwide: How to balance wage equity with economic sustainability in one of the country’s most fragile industries. As Illinois considers similar legislation, we hope policymakers will weigh D.C.’s experience considerably.
House GOP Unveils Sweeping Tax Package Including SALT Cap Adjustment
The House Ways and Means Committee on Monday released a sweeping 389-page tax package at the heart of Republicans’ legislative agenda, setting the stage for a fierce internal battle over key provisions, including the ever-contentious SALT deduction cap.
Dubbed a cornerstone of former President Donald Trump’s policy wish list, the bill revives and expands a range of tax proposals floated during his reelection campaign — from making the 2017 individual tax cuts permanent, to eliminating taxes on tips and overtime, and temporarily exempting car loan interest payments through 2028.
But it’s the SALT cap that could threaten to divide the party.
In a long-anticipated move, the bill proposes raising the state and local tax deduction cap from $10,000 to $30,000 — a nod to pressure from moderate Republicans representing high-tax states like New York, New Jersey, and California. However, that figure falls well short of what those lawmakers had demanded: a cap of $62,000 for individuals and $124,000 for joint filers.
Moderates signaled early resistance and are expected to push for changes during the markup process, raising concerns that internal GOP divisions could stall or even derail the broader legislation.
“The SALT cap is not just a tax issue — it’s a political litmus test in our districts,” said one senior GOP aide. “The current proposal doesn’t go far enough for our members.”
Fiscal conservatives, meanwhile, remain staunchly opposed to expanding the deduction, warning it would balloon the deficit and reward high-spending states.
The bill revives several Trump-era policies that were either temporary or never fully realized. Chief among them is the permanent extension of individual income tax rate cuts enacted in 2017, which are currently set to expire in 2025. The plan also includes headline-grabbing provisions like eliminating federal taxes on service worker tips and employee overtime, a populist measure aimed at working-class voters.
The inclusion of a temporary exemption for car loan interest payments — with carve-outs and exceptions — adds another layer of complexity to a bill already thick with competing priorities.
Monday’s full release comes just days after a partial draft leaked late Friday, igniting speculation over how party leadership would navigate the competing demands of fiscal hawks, pro-Trump loyalists, and suburban moderates. The committee is expected to begin markup sessions this week, with negotiations likely to continue behind closed doors.
The GOP tax package is shaping up to be more than a policy proposal — it’s a test of the party’s post-Trump identity. And as battle lines form over SALT and beyond, it’s clear that reconciling economic populism with fiscal restraint may prove to be the bill’s toughest challenge yet.
Bills of Note:
SB 58, DCEO Regional Manufacturing- passed House State Government 7-0-0. This bill provides that the Department of Commerce and Economic Opportunity may enter into grants, contracts, or other agreements to provide technical assistance in support of regional manufacturing partnerships in collaboration with the following: (1) employer associations representing manufacturers; (2) secondary and postsecondary institutions, including public universities and community colleges; and (3) workforce stakeholders, including local workforce innovation boards and local workforce innovation areas.
HB 3638, Workplace Confidentiality Agreement – passed Senate Labor. This bill provides that no contract, agreement, clause, covenant, waiver, or other document shall prohibit, prevent, or otherwise restrict an employee, prospective employee, or former employee from engaging in concerted activity to address work-related issues. Provides that an employee or former employee and an employer may enter into a valid and enforceable settlement or termination agreement that prevents the employee or former employee from working or from applying to work for the employer in the future if the provision expires within 7 years.
SB 1976, SFA 1 2025 Federal Labor Standards – was recommended be adopted. This bill creates the Workers’ Rights and Worker Safety Act. Provides that, except as authorized by State law enacted after April 28, 2025, a State agency may not amend or revise the State agency’s rules in a manner that is less stringent in its protection of workers’ rights or worker safety than requirements established under federal wage and hour law or federal coal mine safety law as the federal law existed on April 28, 2025. Creates the Illinois Safe and Healthy Workplace Act. Provides that the Department of Labor shall adopt rules to incorporate federal occupational health or safety standards that are repealed or revoked to address occupational safety or health issues. Sets forth rights of action and penalties. Amends the Occupational Safety and Health Act. Provides that the Director Labor may adopt a standard that incorporates a federal occupational health or safety standard as it existed prior to being repealed, revoked, amended, or newly interpreted and addresses the occupational safety or health issue that the repealed, revoked, amended, or newly interpreted federal Occupational Safety and Health Act standard had addressed.
Application Now Open: $10,000 Backing Small Businesses Disaster Recovery Grants for Small Businesses
The Backing Small Businesses grant program, supported by American Express, is now accepting applications for a special round of Disaster Recovery grants. Grant funds will support locally significant small businesses that have been impacted by a natural disaster since January 1, 2024. Businesses can now apply for one of 100 available $10,000 grants to support their recovery efforts.
Applications are currently open and will close on Wednesday, May 21 at 11:59 p.m. CT.
Please help us spread the word to eligible businesses in your network by sharing this opportunity!
Learn More
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
[email protected]
815.727.5371 main
815.727.5373 direct