Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
There was minimal floor activity of note in either the Illinois House or Senate for this roundup. However, the Senate did pass several bills that had received extensions on their Third Reading deadlines.
Discussions and negotiations continue on major issues, including mass transit reform and funding, the Governor’s healthcare priorities, and a potential energy omnibus package. The next key deadline is May 9, by which time House bills must advance out of Senate committees and Senate bills must move out of House committees.
*Government Affairs Roundup brought to you by CITGO*
Illinois Budget Faces New Pressure (End of Last Week Report)
Illinois lawmakers are bracing for an increasingly challenging budget season as signs point to a weakening economy and slipping state revenue. A revised state revenue forecast is expected soon, offering a clearer picture just as legislators work to finalize a budget before the General Assembly’s spring session ends later this month.
The pressure comes amid troubling national economic indicators. U.S. GDP declined by 0.3% in the first quarter — the first contraction in three years — driven by trade uncertainty, new tariffs, and a surge in imports ahead of those duties. “GDP is a big driver of tax revenue,” said David Merriman, a budget expert at the University of Illinois Chicago. “A drop like this signals lower income tax collections.”
Governor JB Pritzker’s February budget proposal projected $55.4 billion in revenue, but recent estimates from the Commission on Government Forecasting & Accountability (COGFA) suggest that figure may be overly optimistic. The commission is now predicting about $700 million less than the governor’s projection — and that was before the full impact of new federal tariff policies took hold.
Those tariffs have sparked concern on Wall Street and prompted economists across the country to revise forecasts downward. “Tariffs and other policy shifts that slow growth or drive inflation could hit government budgets hard — especially those already struggling to stay balanced,” S&P Global Ratings warned this week.
Neighboring Indiana recently adjusted its budget expectations in response to similar concerns, slashing revenue projections by roughly $1 billion annually as it finalized its $27 billion spending plan.
Illinois, too, is likely to see downward revisions. Moody’s Analytics, which in February provided COGFA with a sobering long-term economic forecast, has since cut its Illinois GDP growth forecast for 2025 in half — from 1.6% to 0.8%. Its employment growth projection also fell, from 0.6% to just 0.4%.
“Revenue growth will be weaker than earlier estimates and hiring at the state and local levels will slow as funding tightens,” said Sarah Crane, an economist at Moody’s Analytics. “We’re heading into a very constrained fiscal environment.”
Crane noted that job growth, which rose modestly early in the year, is likely to stagnate. “We’ve already been expecting a slowdown, but now we’re confident it’s on the way,” she said. “The labor market has surprised us before, but we expect job creation to stall for at least a few quarters.”
While tariffs are grabbing headlines, other federal policy shifts could pose longer-term risks to state finances. One of them: immigration.
Tom Jackson, an economist with S&P Global Market Intelligence, noted that unexpectedly high immigration rates in recent years helped fuel labor-force and payroll growth. That trend may now be reversed. “With recent immigration policy changes, we expect labor-force growth to slow significantly,” Jackson said. “That could lead to labor shortages across key sectors like health care and childcare — and ultimately lower economic output.”
A smaller labor force also means reduced income tax revenue, a critical component of the state’s budget.
Ironically, some of the short-term pain from tariffs could boost state revenues temporarily. Inflation, a byproduct of import duties, could raise sales tax collections — particularly for big-ticket items like automobiles. “Some carmakers are pushing consumers to buy now before tariffs raise prices,” Merriman noted. “That could give sales tax revenue a brief lift.”
Still, experts caution that any gains could be short-lived and unlikely to offset broader economic pressures.
One looming wild card: federal funding cuts. The Trump administration has floated major reductions to programs like Medicaid — a potential budget shock that likely won’t be reflected in near-term revenue forecasts.
“In terms of state finances, the biggest threat is federal policy,” Merriman warned.
Illinois Budget Forecast (This Week’s Report)
Illinois lawmakers received a dose of good news as they enter the final stretch of crafting the fiscal year 2026 budget: the state’s independent forecasting commission has raised its revenue projections. However, growing economic volatility continues to cast uncertainty over the state’s fiscal outlook.
The Commission on Government Forecasting and Accountability (COGFA) now projects $54.5 billion in baseline revenue for FY26 — $266 million higher than its March estimate but still $471 million below the $55.2 billion projected by Governor JB Pritzker’s office when he released his budget plan in February.
That gap does not account for Pritzker’s proposed $492 million in additional revenue from tax and policy changes, which are not included in COGFA’s baseline.
For the current fiscal year, which ends June 30, COGFA also revised its revenue projection upward by $317 million. The state is now expected to bring in $53.9 billion in FY25, surpassing both the $53.3 billion lawmakers originally budgeted and the governor’s own February forecast by $31 million.
April income tax receipts were the main driver of the improved forecast, with collections rising $593 million compared to the same month last year — a 20% surge attributed to strong capital gains and interest earnings from the previous year. Corporate income tax collections also increased by 6.6% for the month, although they remain down 8.2% for the fiscal year overall.
Despite the windfall, COGFA warned of significant risks ahead. Federal reimbursements are expected to fall by 8.5% in FY25 and 6.3% in FY26 due to the state shifting Medicaid-related expenses to a fund outside the General Revenue Fund — meaning less federal aid is reflected in general state revenue figures.
COGFA also emphasized the risk of sudden reductions in federal support and cautioned against relying on temporary gains like capital gains revenue. “We should not expect those increases to continue into FY27,” said COGFA Co-Chair Rep. C.D. Davidsmeyer (R-Murrayville). “It’s going to be an even worse look.”
COGFA Revenue Manager Eric Noggle stressed that broader economic headwinds require a “more cautious approach” to forecasting. “The unknown implications of tariffs create many questions,” he wrote, pointing to the risk of recession and policy-driven volatility.
The U.S. economy shrank by 0.3% in Q1 of 2025 — the first quarterly decline since 2022 — despite continued job growth and a 1.8% increase in personal consumption. Analysts say the GDP dip was driven in part by a sharp rise in imports, as businesses rushed to purchase goods before Trump administration tariffs take effect.
“Imports are subtracted from GDP, and this front-loading of purchases has depressed domestic growth,” noted COGFA Chief Economist Ben Varner.
Economists are increasingly sounding the alarm. Wells Fargo has forecast stagflation driven by tariffs and rising inflation, while Goldman Sachs in April estimated a 45% chance of recession. “The U.S. economy has entered a precarious phase,” Varner wrote, citing investor anxiety and policy uncertainty as major concerns.
The governor’s proposed FY26 budget was built on a December S&P Global forecast that assumed stable economic growth while factoring in some of former President Trump’s economic proposals, including tariff hikes and tax cut extensions. Alexis Sturm, the state’s budget director, told lawmakers in February that the administration remained confident in its projections at that time.
But as COGFA’s updated numbers show, caution may be warranted. “Illinois tends to lag the nation in economic growth and stability,” Davidsmeyer warned, “so we need to be prepared for more turbulence ahead.”
Illinois Lawmakers Divided Over Higher Education Funding & Community College Degrees
A major plan to revamp how Illinois funds public universities is facing both strong support and pointed criticism — while a related proposal to allow community colleges to offer four-year degrees remains stalled, revealing a split among Democratic leaders.
Senate Majority Leader Kimberly Lightford (D-Westchester) and Sen. Cristina Castro (D-Elgin) clashed publicly this week over Gov. JB Pritzker’s push to let community colleges offer bachelor’s degrees in select high-demand fields. The disagreement surfaced during a Senate hearing on Senate Bill 13, which would overhaul the university funding model.
Though the bills address different parts of Illinois’ higher education system, both aim to reduce the burden of college costs and expand access for students. However, tensions between traditional universities and community colleges are complicating the debate.
Community College Degree Plan Hits Resistance
Pritzker’s community college proposal (HB 3717 / SB 2482), unveiled in February, has failed to advance in the General Assembly. It would allow certain two-year schools to offer bachelor’s degrees in workforce-aligned programs — a move designed to improve access for older and non-traditional students.
But university leaders and Lightford argue the plan threatens already-declining university enrollments.
“Community college students need to stay at the two-year level,” Lightford said. “When you begin to offer four-year programs at a two-year school, those students who would traditionally go to a four-year university — we’ll lose those students.”
Castro, who chairs the Senate Executive Committee, pushed back: “If students are really the focus, why are you opposed to four-year degrees at community colleges?”
While not a sponsor of the legislation, Castro defended it as one of the governor’s key initiatives. Lightford, in response, emphasized the focus should remain on the university funding reform bill, stating: “This isn’t that bill.”
$1.7 Billion University Funding Reform Proposal
The main focus of Wednesday’s hearing was Lightford’s SB 13, the result of four years of work by the Illinois Commission on Equitable Public Higher Education Funding. The bill would inject an estimated $1.7 billion into the state’s public universities over 10–15 years, using a new equity-based formula to allocate funds.
“This bill doesn’t just aim to increase funding,” Lightford said. “It defines what universities require to educate and graduate students and then directs resources accordingly.”
The formula would determine an “adequacy target” for each institution based on instructional, operational, and student support costs — adjusted for demographics such as low-income or underrepresented students. Universities would then be evaluated based on how close they are to meeting that target.
Preliminary data shows:
- Western Illinois University is the most underfunded by percentage (45.7% adequacy).
- University of Illinois Chicago has the largest funding gap in dollars ($475.5 million).
- University of Illinois Urbana-Champaign is the best-funded (88.6%) but still has a $137.4 million gap due to its size.
University of Illinois Opposes Funding Formula
Despite supporting the bill’s goals, the University of Illinois System strongly opposes the proposed distribution method. Nick Jones, the system’s executive vice president, said it would penalize the state’s flagship university, which enrolls more than half of all public university students in Illinois — including 45% of all Pell Grant recipients.
Under the proposal, the U of I system would receive only 28% of new funds and could bear 74% of any future budget cuts due to protections for less adequately funded institutions.
Jones called for a “mission-aligned” approach that recognizes the unique contributions of different universities and ensures funding drives measurable student outcomes and economic impact.
What’s Next? The Senate committee took no vote on SB 13, and its House counterpart, HB 1581, remains pending. Sponsored by Rep. Carol Ammons (D-Urbana) and supported by House Speaker Emanuel “Chris” Welch and Rep. Katie Stuart, the proposal still faces negotiation and possible revisions as the legislative session progresses.
As debates over equity, access, and institutional survival continue, Illinois’ higher education system remains at a crossroads.
Transit Reform Deal Nears as Deadline Approaches
With just weeks remaining before the Illinois General Assembly adjourns on May 31, lawmakers are edging closer to a deal on a long-awaited overhaul of the Chicagoland public transit system—an issue that has dominated this legislative session.
Facing a $770 million shortfall in the upcoming fiscal year, the Chicago Transit Authority (CTA), Metra, and Pace Suburban Bus have pleaded with the state for financial help. But lawmakers have been clear: no new funding without governance reform and stronger oversight.
Sen. Don DeWitte (R-St. Charles), a key player in the negotiations, said this week that the Senate is “very close” to agreement on transit governance. The emerging plan would preserve the existing service boards—CTA, Metra, and Pace—while expanding the oversight powers of the Regional Transportation Authority (RTA), which currently handles limited financial oversight.
DeWitte, a former RTA board member, compared the deal to a plan supported by organized labor groups that advocates incremental reforms rather than sweeping structural change. It also bears similarities to a proposal by current RTA Chairman and former Republican lawmaker Kirk Dillard, which would strengthen RTA authority without consolidating the service boards.
This approach contrasts sharply with a more aggressive plan supported by environmentalists and transit advocates. That proposal, championed by Sen. Ram Villivalam and Rep. Eva-Dina Delgado, both Chicago Democrats, would eliminate the three boards entirely and create a unified regional transit agency.
Villivalam, chair of the Senate Transportation Committee, said negotiations are ongoing. “I look forward to working toward a solution that provides safe, reliable, accessible, and integrated public transit to the northeastern Illinois region,” he said in a statement.
Despite Senate progress, hurdles remain in the House. Rep. Marty Moylan (D-Des Plaines), who chairs the relevant committee, has said he won’t consider a bill that doesn’t address transit safety concerns. Still, he believes the labor-aligned proposal is gaining traction.
“That seems to be the consensus of the General Assembly,” Moylan said. “Leave the boards in, have them do some reforms, and let’s move forward.”
However, the RTA’s recent $750,000 “Save Transit Now” ad campaign—meant to pressure lawmakers and alert riders to the system’s funding crisis—has drawn bipartisan ire.
“To cry broke with one hand and drop three-quarters of a million dollars on a PR campaign with the other is wrong, and frankly, it’s irresponsible,” said Rep. Kam Buckner (D-Chicago), who leads the House transit working group.
Moylan was similarly blunt: “They’re wasting all kinds of money… It’s not how it works.”
RTA spokesperson Tina Fassett Smith defended the campaign, saying it was necessary to inform riders about the system’s financial challenges.
Chicago Mayor Brandon Johnson added his voice to the funding debate during a visit to Springfield this week. He reiterated that Chicagoans make up the majority of riders in the transit system and hinted they might also be expected to contribute more to its funding.
“The city of Chicago deserves its fair share, and we’re going to continue to advocate for that,” Johnson said. When asked if Chicago should also bear the largest funding burden, he replied: “That’s a conclusion that one could draw.”
Johnson’s relationship with Springfield lawmakers has been strained due to past political missteps, but his support may still influence the final negotiations.
As the May 31 deadline looms, lawmakers face mounting pressure to strike a balance between funding and reform. Without a deal, transit officials warn of massive service cuts across the region.
iGaming Gains Support in Illinois, but Critics Push Back
As Illinois lawmakers weigh the possibility of legalizing iGaming—online casino-style gambling via mobile devices—a new poll commissioned by the Sports Betting Alliance suggests strong public support. The survey, conducted by Impact Research, found that 66% of voters would prefer authorizing iGaming to address state budget shortfalls over alternatives like tax increases or funding cuts.
The poll, which sampled 600 Illinois voters, comes at a critical time as the legislature considers budget-balancing options before adjournment later this month. A recent analysis from gambling consultancy Eilers & Krejcik estimates that iGaming could generate $775 million in state tax revenue within five years, assuming a tax rate of roughly 25%.
Two iGaming bills are currently in play: Senate Bill 1963, sponsored by Sen. Cristina Castro, and House Bill 3080, sponsored by Rep. Edgar Gonzalez Jr. Lawmakers are exploring how these proposals might be merged into final legislation.
Opposition Voices Concern
Despite the optimistic poll results, opposition groups are sounding alarms. Critics argue that the poll overstates the financial benefits and downplays the social costs of iGaming. Ivan Fernandez, head of the Illinois Gaming Machine Operators Association, warned in a statement to Playbook that legalizing iGaming would “cannibalize revenue from the existing domestic gaming industry,” threatening thousands of jobs and billions in economic development. “This means losing jobs and sending money to an industry largely based out of state or overseas,” he said.
The Illinois Licensed Beverage Association also criticized the proposal, noting that many bars and restaurants rely on revenue from video gaming terminals to stay afloat. Legalizing iGaming, they argue, would shift consumer behavior away from local businesses.
Brianne Doura-Schawohl, a responsible gambling advocate, warned that expanding online gambling could lead to higher addiction rates and increase access for minors and teens. “Making gambling as easy as picking up your phone comes with serious risks,” she said.
With the end of the legislative session approaching, iGaming remains a contentious topic. Supporters tout its revenue potential and public backing, while opponents warn of economic and social consequences. Lawmakers will need to weigh both sides carefully as they shape the state’s gambling future.
Bills of Note:
State Supported Paid Leave
The Illinois Senate extended its committee and third-reading deadlines to May 9 for a bill that would impose a job tax on Illinois employers and employees.
SB 2413 (Villivalam) would impose a payroll (or job) tax on Illinois workers and employers to fund a state-run paid-leave program.
The proposal is currently in the Paid Leave Subcommittee of the Senate Executive Committee.
The legislation calls for a beginning payroll tax of 1.12% on wages to go into effect on January 1, 2027.
- Initially the employee would pay 40% of the payroll tax and employers with 25 or more employees would pay the remaining 60%.
- Beginning January 1, 2029, all employers would be required to pay 60% of the payroll tax.
The payroll tax percentage could fluctuate based upon the program’s spending but, in the proposal, it is capped at 1.25% of wages.
Minnesota passed a similar proposal in 2023 and—even before the program has fully gone into effect—the state has already increased the payroll tax it initially imposed on Minnesota jobs.
Under the proposal, employees would be eligible for up to 18 weeks of paid family and medical leave per year. In addition to the 18 weeks, employees would be eligible to take an additional 9 weeks of paid leave for pregnancy-related issues.
Authorized reasons for leave include:
- Personal-health issues
- Physical or psychological care of a family member
- Birth, adoption, or placement of a child
- Pregnancy-related issues
- Personal or family member’s experience of domestic or sexual violence
The program would pay individuals 90% of their average weekly benefit rate up to $1,200 during authorized leave. The maximum payment rate would be adjusted every year to match Illinois’ weekly wage rate.
The payroll tax would not be assessed on the first $15,000 in income or on income above $352,200 (or “2 times the Social Security contribution and benefit base…whichever is greater”).
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct