Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
Illinois Governor JB Pritzker delivered his eighth State of the State/Budget Address just a few hours ago. Below is a recap of that speech as well as a quick reply from the Illinois Chamber of Commerce. Watch for a more in depth recap in next week’s edition.
Senate Democrats late on Monday night sent a counterproposal to the White House to fund the Department of Homeland Security (DHS) as the impasse reaches almost a week with no deal in sight.
I’m sharing two last minute reminders for a busy week of gatherings next week. First, we are celebrating with our 2026 Annual Dinner and Celebration of 2025 Success on Tuesday evening. The window to rsvp is closing quickly, but time remains. Below is the link for that event:
https://members.jolietchamber.com/events/details/2026-annual-dinner-celebration-of-2025-success-presented-by-silver-cross-hospital-7771
Speaking of celebration information, we’re happy to welcome Heritage Corridor Destinations President/CEO, Bob Navarro, as our speaker for the February member luncheon taking place on Thursday, February 26. Bob will highlight the first 100 miles of Route 66 in Illinois and share how communities are preparing to celebrate the highway’s centennial through special events and programs. Attendees will also gain insight into the partnerships, tourism initiatives, and regional experiences HCD is helping to develop, and how these efforts are shaping the future of the corridor.
RSVP to join us here: https://members.jolietchamber.com/events/details/2026-member-lunch-february-26-route-66-at-100-experience-partnerships-the-road-ahead-7791
*Government Affairs Roundup brought to you by CITGO*
Illinois State of the State and Budget Address Recap
Facing mounting uncertainty over federal funding and economic conditions, Governor JB Pritzker outlined a $56 billion budget proposal that would increase state spending by 1.6% next fiscal year — one of the smallest hikes since he took office.
After several years of significant growth in state expenditures, the governor framed this year’s proposal as a pivot toward caution. He said the plan is designed to protect Illinois’ improved financial standing without resorting to broad-based tax increases, even as cost pressures persist.
To balance the budget, Pritzker is proposing targeted new revenue streams. Among them is a tax on large social media platforms, projected to generate about $200 million annually for education funding. He is also seeking higher taxes on gaming operations to align rates between electronic and table games. A similar digital tax proposal surfaced late in the previous legislative session but failed to advance.
Governor Pritzker said he directed state agencies months ago to identify potential 4% reductions in spending in order to build a $500 million reserve against possible shortfalls. In his State of the State address, he acknowledged that the proposal reins in — and in some cases trims — programs he personally supports.
“Prudence demanded that this year’s budget proposal seeks a discretionary spending increase that is less than one-half of one percent,” he said, arguing that long-term fiscal stability must take precedence over political considerations.
The governor, who is seeking a third term, frequently points to 10 credit rating upgrades Illinois has received since 2019, when the state was grappling with an $8 billion bill backlog. Supporters argue those gains reflect disciplined financial management.
Republicans counter that overall state spending has climbed roughly 40% during his tenure. Senate Republican Leader John Curran said ahead of the budget address that protecting Illinois’ fiscal health will require tighter spending controls and policies aimed at encouraging investment and economic growth.
Much of the proposed increase is tied to obligations the state must meet. Required contributions to Illinois’ underfunded pension systems total $10.7 billion for the coming year. Education funding will rise under the state’s evidence-based formula, and healthcare costs continue to climb.
Budget officials say that without those mandated expenses, discretionary spending growth would fall below 0.5%.
At the same time, revenue forecasts remain fluid. While earlier projections warned of a $250 million shortfall due to changes in federal tax law, updated estimates now show roughly $1 billion more in anticipated revenue than previously expected. Stronger-than-forecast individual income tax receipts — fueled in part by stock market gains — and resilient sales tax collections helped improve the outlook.
Still, federal funding remains the biggest wildcard.
Illinois expects federal contributions to its general fund to rise by about 1.4% to $4.1 billion next year. But longer-term projections are less certain. The administration warns the state could lose up to $6.6 billion in federal Medicaid funding between 2027 and 2032, along with potential reductions in other grant programs.
Proposed spending cuts under President Donald Trump’s administration have heightened those concerns, though some are being contested in court. The possibility of reduced federal support has shaped the governor’s push to build reserves and limit new spending commitments.
Even as he emphasizes restraint, Pritzker sought to address voter concerns about the rising cost of living. “We won’t let headwinds from Washington stop us from addressing the fact that Illinoisans … are still paying too much for groceries, too much for housing, too much for electricity,” he said. “Everything is just too damned expensive.”
The proposed social media tax would apply to platforms with at least 100,000 Illinois users, beginning at 10 cents per user per month and increasing for larger companies. The concept is similar to a digital advertising tax adopted by Maryland in 2021, though revenue there has fallen short of original projections.
In addition, the governor renewed his push to grant the Illinois Department of Insurance authority to regulate homeowners’ insurance rates. Companies such as Allstate and State Farm currently set rates without prior state approval. A reform bill passed the Senate last year but stalled before final approval.
Pritzker said nearly 1.5 million Illinois households could see homeowners’ insurance premiums rise by an average of $750 this year, calling the situation a crisis for many families.
The governor’s proposal attempts to strike a balance: slow the pace of spending growth, guard against federal instability and respond to affordability concerns — all while maintaining the fiscal improvements his administration highlights.
As lawmakers begin negotiations, the debate will center on whether the plan represents disciplined stewardship or whether deeper spending constraints — or broader tax changes — are necessary to secure Illinois’ long-term financial footing.
Illinois Chamber Responds to Governor Pritzker’s State of the State and Budget Address
The Illinois Chamber of Commerce appreciates Governor Pritzker’s FY27 Budget Recommendation that seeks to address many of today’s economic challenges. We understand that balancing a budget requires making tough decisions with limited resources. However, this budget proposal contains several concerning provisions that send the wrong signal to existing Illinois businesses and those seeking to locate here.
The Chamber certainly shares the Governor’s desire to build more housing, spur nuclear energy development to lower the cost of energy for consumers, and invest in vocational training programs. Unfortunately, the Governor’s proposal also relies on policies that could have negative impacts on business development, cost of living, and overall tax burden on Illinois job-creators.
Today’s announcement that the State will be suspending the Data Center Investment Tax Credit, one of Illinois’ greatest economic development tools in recent history, risks accelerating the State’s negative economic outlook. Further, relying on flawed revenue and regulation proposals, such as the Net Operating Loss Deduction corporate tax change, the Social Media Platform Fee, the so-called “junk” fee ban, and misguided policy targeting our robust insurance industry, sends the wrong message to Illinois employers and the workers and communities they support.
The Illinois Chamber of Commerce remains committed to working with the General Assembly, Governor’s Office, and willing partners to advance innovative solutions that prioritize economic growth, affordability, and fiscal stability.
Governor Pritzker to Advance Statewide Housing Reform in State of the State
Governor JB Pritzker is set to propose sweeping statewide zoning reforms during his State of the State address, positioning housing supply and affordability as a central economic priority.
The plan — branded Building Up Illinois Developments (BUILD) — would significantly limit the ability of local governments to restrict certain types of residential development. It also includes $250 million in targeted capital funding aimed at accelerating home construction and lowering development costs.
For business leaders, developers and local officials, the proposal represents one of the most aggressive state-level interventions in housing policy in recent years.
Why It Matters: Supply Constraints and Rising Costs
Illinois faces a substantial housing shortage. A University of Illinois study estimates the state is short roughly 142,000 housing units and would need to build 227,000 homes over the next five years — about 45,000 units annually — to meet demand. That’s nearly double the average annual production between 2019 and 2024.
The imbalance has had measurable economic consequences:
- Home prices have risen 37% over five years.
- Active listings have fallen 64%.
- New construction permits are down 13%.
Administration officials argue that fragmented local zoning rules and permitting practices have constrained supply, discouraged capital investment and driven up costs statewide.
“All these things work together in a way that is designed to shift the narrative around whether or not Illinois is a good place to build housing,” a senior administration official said. “Right now, the answer is ‘no.’ We want the answer to be ‘yes.’”
Statewide Zoning Framework
At the center of BUILD is a tiered statewide zoning standard designed to increase density in residential areas.
Under the proposal:
- Residential lots larger than 5,000 square feet could no longer be restricted to single-family homes.
- A sliding scale would allow additional units as lot size increases, with the largest parcels potentially accommodating up to eight units.
- Lots under 5,000 square feet would remain reserved for single-family homes.
- The minimum lot size under the statewide standard could be as small as 2,500 square feet.
Accessory dwelling units (ADUs) — such as backyard cottages, “granny flats” and above-garage apartments — would be permitted on all residentially zoned properties statewide.
Local governments would retain authority over zoning classifications overall, and standard permitting and inspection requirements would still apply. However, municipalities would lose the ability to categorically prohibit multi-unit housing on qualifying residential lots.
The proposal is likely to face resistance from municipalities, townships and counties concerned about the preemption of local zoning control.
Because statutory changes are required, final lot-size thresholds and density limits will be subject to negotiation in the General Assembly.
Cutting Development Barriers
Beyond zoning density, the plan aims to reduce what the administration calls a “patchwork of local barriers.”
Key regulatory changes would include:
- Statewide timelines for permit reviews and inspections.
- Authorization for qualified third-party reviewers if local governments fail to meet deadlines.
- Standardized impact fee practices.
- Modernized building codes.
- Elimination of minimum parking requirements for middle housing.
- Exemptions from municipal parking mandates for affordable housing projects.
Administration officials argue that unpredictability and delay in permitting discourage private investment and increase carrying costs, ultimately raising home prices.
“We have municipalities that are going above and beyond,” the administration official said. “But if it’s one out of hundreds, it’s not attracting capital. It’s too piecemeal.”
$250 Million Capital Investment
In addition to regulatory reform, the governor is proposing $250 million in capital funding, drawn from infrastructure-related revenue sources rather than the General Revenue Fund.
The funding would be allocated as follows:
- $100 million through the Illinois Department of Commerce and Economic Development for infrastructure grants covering sewer, stormwater, utility and site preparation costs — expenses that often stall projects before construction begins.
- $100 million via the Illinois Housing Development Authority to support middle housing development, available to private and nonprofit developers.
- $50 million split between two homebuyer assistance programs:
- Opening Doors, which provides $6,000 loans for down payment and closing costs.
- SmartBuy, which helps borrowers overcome student loan debt barriers to homeownership.
Since 2020, the programs have assisted more than 13,000 homebuyers.
Broader Economic Strategy
The proposal reflects a strategic shift from short-term tax relief — a hallmark of the governor’s 2022 reelection cycle — toward structural reforms targeting housing supply, the largest cost burden for most Illinois households.
An ad hoc housing committee convened in 2024 concluded that Illinois must pursue a coordinated, multi-pronged strategy to expand supply for middle-income households. Many of its recommendations are embedded in the BUILD framework. The governor later issued an executive order directing agencies to identify ways to accelerate housing production.
Both the zoning changes and the capital spending plan will require legislative approval. If enacted, the proposal would mark a significant recalibration of state and local roles in housing development — and could materially reshape the investment climate for residential construction across Illinois.
Housing Reform Package Targeting Private Equity Influence Introduced
State Senator Rachel Ventura, D-Joliet, has introduced a series of bills aimed at curbing the growing influence of private equity firms in Illinois’ housing market — a trend she says has contributed to rising home prices, reduced housing supply and increased financial pressure on families seeking affordable housing.
According to a news release, Ventura’s legislative package is designed to increase transparency for renters, expand tenant purchasing rights and reinvest in affordable housing development.
One proposal, Senate Bill 3363, would require landlords to include all mandatory service fees in a property’s advertised base rent. This measure is intended to prevent renters from being surprised by additional charges after signing a lease and to ensure they understand the full cost of housing before committing to a rental agreement. The bill also would prohibit certain insurance requirements described as predatory.
A second measure, Senate Bill 3674, would grant tenants the right of first refusal when a residential property is put up for sale. The provision would give residents the opportunity to purchase their building before it is sold to outside investors, including private equity firms. The legislation also would allow tenants in multi-unit buildings to coordinate joint purchase offers, encouraging community ownership and promoting long-term housing stability.
The third proposal, Senate Bill 3501 — titled “Restock the Block” — would impose a fee on private equity firms that purchase existing residential properties. Revenue generated from the fee would fund grants for public and affordable housing development, with the goal of rebuilding housing inventory and reinvesting in communities affected by corporate consolidation of residential properties.
Together, the measures represent a broader effort to address affordability challenges and reshape the balance between large institutional investors and Illinois residents in the state’s housing market.
Governor Pritzker Pushes for New Nuclear Reactors as Illinois’ Energy Outlook Shifts
Illinois’ long-standing status as a net exporter of electricity is increasingly uncertain, as explosive growth in energy-intensive data centers — driven largely by artificial intelligence — pushes demand higher and drives up prices across the grid.
In response, Governor JB Pritzker is expected to sign an executive order directing state agencies to begin identifying potential sites for new nuclear reactors — the first such effort in Illinois in nearly 40 years. Lawmakers lifted the state’s moratorium on new nuclear construction last year, clearing the way for the initiative.
Pritzker’s order calls for adding 2 gigawatts of new nuclear capacity, either through construction of new plants or expansions of existing facilities, with a goal of breaking ground by 2033. That amount of power is roughly equivalent to two traditional reactors — enough electricity to serve about 2 million homes — and comparable to the demand of a single large-scale data center currently under development in Northwest Indiana.
Illinois already operates the largest nuclear fleet in the nation, with six facilities housing 11 reactors. While the state remains a net power exporter, rising regional demand threatens that position. Illinois is part of the PJM regional grid, where electricity prices are influenced by competitive auctions for reserve power during peak demand periods. As demand climbs across the region, prices increase for all participating states. A recent report suggests Illinois could begin importing electricity by 2030.
The executive order directs the Illinois Power Agency and the Illinois Commerce Commission to evaluate potential nuclear sites and develop a modern legal and regulatory framework. Agencies will gather information from developers about reactor technologies, projected costs and timelines, financing structures, economic benefits, consumer protections, and environmental and safety standards. A report with recommendations is due within 150 days.
“This work will equip agencies with the information and expertise needed to evaluate new nuclear facilities as part of Illinois’ portfolio,” Pritzker said in a statement. State officials indicate they have already heard from companies interested in developing projects in Illinois. Communities would be invited to express interest in hosting a facility; the administration has emphasized that no project would be imposed on an unwilling community.
Still, the timeline is ambitious. New nuclear plants can take a decade or more to secure regulatory approval, followed by another decade to construct. Expanding existing facilities could potentially move more quickly.
Cost remains a major hurdle. The most recent conventional reactors — completed in Georgia in 2023 and 2024 — carried a combined price tag of roughly $35 billion. Since then, no new large-scale reactors have been proposed. Illinois deregulated its energy market decades ago, and in recent years the state has had to subsidize certain nuclear facilities to keep them operational.
Mark Pruitt, head of energy consulting firm The Power Bureau and a former director of the Illinois Power Agency, argues that merchant nuclear plants are unlikely under current market conditions. “A merchant nuclear power plant is not likely to be built because the liabilities are so high,” he said. “It takes a regulated utility because they’re guaranteed they can make back their returns.”
Small modular reactors may offer a more viable path, Pruitt notes, but the technology has yet to be fully commercialized.
The governor’s push for nuclear expansion comes as he prepares to outline his new state budget and continues to emphasize both clean energy and affordability as central themes of his administration. He may also find unexpected alignment with President Donald Trump, who last year set a national goal of quadrupling U.S. nuclear output by 2050.
Whether Illinois can successfully attract and finance new nuclear development remains uncertain — but the state’s rapidly shifting energy landscape is clearly forcing policymakers to reconsider long-standing assumptions about supply, demand, and the future of power generation.
Judge Upholds Illinois Law Limiting Credit Card “Swipe Fees”
A federal judge has rejected efforts by the banking industry to block implementation of an Illinois law that exempts state and local taxes — as well as tips — from so-called swipe fees charged by credit card processors.
The decision marks a setback for banks, credit card companies and airlines such as United Airlines, which generate significant revenue through credit card partnerships and have opposed the law since its passage. Illinois’ measure is the first in the nation to restrict interchange fees in this way, and industry groups argue compliance could cost some issuers tens of millions of dollars as they overhaul payment systems.
In a 47-page opinion, Judge Virginia Kendall of the U.S. District Court for the Northern District of Illinois acknowledged the operational burden the law will impose but concluded it does not conflict with federal law or prevent financial institutions from operating within federally permitted frameworks.
“The Interchange Fee Provision is indisputably disruptive, requiring additional investments, hires, and new procedures to replace the current process for authorizing and settling debit and credit card transactions,” Kendall wrote. “These compliance costs, among others, are undeniable. But State (and federal) laws will always require some kind of compliance cost, no matter who bears it.”
Banking trade associations quickly signaled they will appeal, arguing that federal law governing financial transactions preempts the Illinois statute.
In a joint statement, the American Bankers Association, Illinois Bankers Association, America’s Credit Unions and Illinois Credit Union League called the ruling “a serious error” and warned it could create confusion for consumers and businesses.
The Illinois Attorney General’s Office said it is reviewing the decision but declined further comment due to ongoing litigation. Kendall scheduled a status hearing in the case for March 4.
Retailers and small business advocates, who supported the law, welcomed the ruling. Rob Karr, president and CEO of the Illinois Retail Merchants Association, described the decision as “a historic win for Main Street over Wall Street,” arguing it will save businesses and consumers millions of dollars annually and could serve as a model for other states.
The judge did partially side with the financial institutions by striking down a provision that limited how payment data collected during transactions could be shared.
In earlier proceedings, Kendall issued a preliminary injunction shielding federally chartered banks from the law, while allowing it to apply to state-chartered banks and credit card companies.
The legislation was passed during a late-night session of the Illinois General Assembly in 2024. Originally scheduled to take effect July 1, 2025, implementation was delayed by one year to give financial institutions additional time to comply.
Governor Pritzker Highlights Expansion of STAR Bond Program
Governor JB Pritzker joined the Illinois Department of Commerce and Economic Opportunity (DCEO), the Illinois Department of Revenue (IDOR), and local leaders to highlight the expansion of the Sales Tax and Revenue (STAR) bond program to communities statewide. The program is designed to support economic growth with financing options to develop and revitalize communities through major tourism, entertainment, retail, and destination-based projects in STAR bond districts.
“The STAR bond program provides local governments with a sensible, fiscally responsible path to bringing major projects to their towns and transformational opportunity to their people,” said Governor JB Pritzker. “By expanding it, we’re opening up more paths to sustainable growth across Illinois. Our state has so much to offer, each community with unique characteristics and character. STAR bonds give them every opportunity for investment in long-term development and prosperity.”
Governor Pritzker expanded STAR bond eligibility to municipalities statewide through SB1911, which was signed in December 2025. This legislation empowers municipalities in every region of the state, providing them with additional financing options to meaningfully invest in capital projects that will attract visitors and spur additional revenues in local economies. Municipalities who are accepted into the program and approved for projects are permitted to issue STAR bonds to finance large-scale projects.
STAR bonds are an economic development tool for driving job creation in Illinois communities by encouraging large-scale development projects that generate both immediate and long-term employment opportunities. By using future sales tax revenues within a STAR bond district to unlock private investment, these projects will support construction jobs; permanent positions in tourism, entertainment, and retail; and related employment. If all eligible STAR bond projects are completed, they could eventually generate at least $1 billion in sales and create more than 5,000 new jobs across Illinois.
“The State of Illinois aims to support communities in every corner of the state by promoting revitalization, development, and job creation, and expanding the STAR bonds program is a meaningful step forward for communities pursuing investment,” said DCEO Director Kristin Richards. “DCEO stands ready to share information about the expanded STAR bonds program with communities interested in accessing this powerful tool.”
“The expanded STAR bonds program gives Illinois a new way to turn local growth into local opportunity,” said IDOR Director David Harris. “By reinvesting future sales tax growth, communities can support development that benefits residents today and for years to come.”
In order to be eligible for the program, units of local government must first establish a STAR bond district via resolution. These districts must be in a contiguous area with at least 10,000 residents within a five-mile radius that is located no more than 15 miles from either a state highway or federal interstate. At least 50% of this area must be located within an underserved area at the time the district plan is submitted. A STAR bond district may not be located, either entirely or partially, inside a municipality with more than 2 million residents.
After a STAR bond district is approved locally, units of local government may submit a STAR bond project to the state for consideration. Selected projects will be ones bolstering significant economic activity and job creation, while promoting major tourism, entertainment, and retail endeavors. This excludes projects related to professional sports stadiums.
As outlined in statute, the number of projects available for each area is based on economic development region population:
- One project: population of less than 600,000
- Three projects: population of between 600,000 and 999,999 (North Central and Southwest)
- Four projects: population of 1 million or more (Northeast)
Interested municipalities and counties must email CEO.STARbonds@illinois.gov to notify DCEO of an intent to establish a STAR bond district by June 1, 2026. To learn more, please visit the DCEO website.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct