“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
After weeks of delay, the U.S. House on Thursday approved the Senate’s legislation reopening the Department of Homeland Security. President Trump signed the legislation shortly after, ending the 76-day DHS shutdown. All agencies except Immigration and Customs Enforcement and U.S. Customs and Border Patrol will receive full annual funds.
The adoption of the hybrid FY 2026 Homeland Security appropriations bill comes a day after the House adopted the Senate’s blueprint for a budget reconciliation bill to provide annual ICE and CBP funding for the next three years.
Back here in Illinois, only 25 days remain to pass legislation and the next budget. Session is in full swing tackling the various issues that remain.
*Government Affairs Roundup brought to you by CITGO*
Illinois Finance Report Update
State lawmakers are heading into the final stretch of the General Assembly session with a bit of welcome stability on the budget front, as new revenue data suggests the state’s finances are holding steady.
According to a report from the Commission on Government Forecasting & Accountability, individual income tax receipts in March and April rose 4.1% compared to the same period last year. That consistency helped ease concerns that an uncertain global economy or potential federal budget cuts might trigger a late-session fiscal shortfall.
“There was no ‘April Surprise,’ as receipts remained consistent with recent trends,” the commission noted, signaling that revenues are coming in largely as expected.
Overall, general-fund revenue is up 3.8% through the first 10 months of the fiscal year. That modest but steady growth is giving lawmakers and Governor JB Pritzker some breathing room as they finalize a spending plan for the fiscal year beginning July 1.
Pritzker has proposed a $56 billion budget—an increase of about 1.6% over the current year—after previously directing state agencies to prepare for 4% spending reductions. The relatively stable revenue picture may ease some of that pressure, though not eliminate it.
April revenue performance was particularly strong, ranking as the second-highest on record behind April 2022, when collections were boosted by pandemic-era federal stimulus. Personal income taxes—the state’s largest revenue source—brought in $5.37 billion for the month.
Sales tax revenues also grew, rising 2.4% in April. However, that marks a slowdown from the 5.1% growth seen earlier in the fiscal year. The commission attributed the continued gains in part to rising prices, as inflation has ticked up in recent months.
Not all revenue streams are trending upward. Corporate income tax receipts, a smaller portion of the state’s overall revenue, are down 6.8% year-to-date, largely due to changes in federal tax policy.
Budget negotiators say the current revenue environment is stable. Rep. Kam Buckner, a House budget negotiator, characterized the outlook as steady rather than exceptional, emphasizing the importance of fiscal discipline.
He noted that growth continues to be driven primarily by income and sales taxes, even as other areas like corporate receipts and federal transfers soften. The broader takeaway, he suggested, is that the economy remains on solid footing, but the state should avoid overextending itself.
That caution is shared by outside observers. David Merriman, a professor at the University of Illinois Chicago, said the state should be mindful of looming fiscal pressures—particularly anticipated federal changes to Medicaid funding set to take effect midway through the next fiscal year.
While steady revenues may create temptation for tax relief measures—especially in an election year marked by voter concerns over high gas prices—lawmakers are also weighing the need to prepare for potential cost increases ahead.
For now, the consensus appears to be that while the state’s fiscal outlook has improved slightly, it still calls for careful, measured budgeting rather than major new spending commitments or cuts.
Economic Development Legislation
After gaining momentum in the Illinois House, legislation tied to the Chicago Bears’ proposed stadium in Arlington Heights is entering a more complicated phase in the Senate, where lawmakers are signaling a slower, more deliberate approach as tax issues come into sharper focus.
The House approved an amended “megaproject” bill last week aimed at supporting large-scale developments, including the Bears’ proposal. However, both the team and Governor JB Pritzker have indicated further revisions are needed to keep the project competitive with potential alternatives in Indiana.
At the center of the Senate’s concerns is a newly added provision requiring developers to dedicate 50% of any negotiated payment in lieu of taxes (PILOT) toward property tax relief. While the Bears would still receive a significant property tax break under the bill, that set-aside could complicate negotiations with local taxing bodies—particularly school districts that rely heavily on property tax revenue—by pushing them to demand higher overall payments.
Sen. Bill Cunningham, the Senate’s lead negotiator, said lawmakers are reviewing both the House bill and a list of requests from the Bears, but emphasized there is no rush to act before the May 31 adjournment deadline. “The Legislature is in session until May 31, that is the deadline we are operating with,” Cunningham said, describing the process as intentionally deliberative.
Cunningham also acknowledged the challenge of balancing property tax relief with project feasibility. While lawmakers broadly support including relief for homeowners, he warned that requiring too large a share of PILOT revenues could make projects financially unworkable.
“We agree with the House’s effort to embed a property tax relief mechanism,” he said. “The concern is whether the cost becomes too high for the developer to move forward.”
The House proposal would split the property tax relief funds, with 60% directed to local residents and 40% allocated to a statewide program that currently lacks a dedicated funding source. That broader distribution could dilute the impact for homeowners, adding another layer of complexity to negotiations.
Governor Pritzker has not explicitly called for removing the 50% set-aside but has stressed the need for any relief to be meaningful without undermining the Bears’ ability to proceed with the project in Illinois.
Meanwhile, the Bears have remained quiet publicly. The team recently met with National Football League owners to discuss stadium options and is expected to continue those discussions in the coming weeks.
Bond Program Changes and Development Incentives
Beyond the stadium proposal, the House legislation includes broader economic development tools, most notably revisions to the state’s Sales Tax and Revenue (STAR) bond program. The changes would create new tiers designed to support large projects in Chicago, Springfield, and the Metro East region near St. Louis.
STAR bonds allow municipalities to capture future sales tax revenues within a designated district and use those funds to finance infrastructure tied to new developments.
The House bill also appeared to authorize municipalities to impose a new “visitor investment surcharge” of up to 9% on entertainment-related activities, including sporting events, concerts, and trade shows. The provision raised concerns from the governor and the Bears, but lawmakers say it was not intended to apply to the Arlington Heights project and will be clarified in a future amendment.
According to Cunningham, the surcharge is designed for a separate development in Metro East, specifically a planned water park in Glen Carbon, where local officials currently lack authority to impose a similar tax.
Another key addition to the bill is the creation of a new incentive category for “Railroad Rehabilitation Economic Development Yards,” or RREDY. The provision would allow certain large redevelopment projects—particularly those involving underutilized rail yards—to negotiate PILOT agreements.
Lawmakers began exploring this concept as interest grew in redeveloping several major sites in Chicago, including the long-stalled One Central and Michael Reese properties, as well as a rail yard tied to potential investment by businessman Justin Ishbia.
Cunningham said the goal is to unlock economic potential in areas that have historically generated little tax revenue despite their size and location. “Chicago has long been the railroad capital of the world,” he said. “But many of those legacy rail yards have never been on the tax rolls and haven’t produced broader economic activity. This is an opportunity to change that.”
With multiple moving pieces—including the Bears’ stadium proposal, property tax relief, and new statewide development tools—lawmakers face a complex set of tradeoffs. For now, Senate leaders appear intent on taking the time needed to reconcile those priorities before advancing the legislation.
Wealth Tax
After the Illinois House failed to advance the “Millionaires’ Tax” proposal last month, progressive advocacy groups and members of the legislature’s progressive caucus have renewed their push for policies aimed at increasing taxes on high-income earners. This year, the Illinois Revenue Alliance has put forward four bills in both the House and Senate, each sponsored by progressive caucus lawmakers. The Alliance’s legislative agenda one-pager can be found here.
This week, the Illinois Senate Revenue Committee will be holding a Subject Matter Hearing—with no votes scheduled to be taken—on each of these proposals. The proposals include the following:
SB 3353 Digital Ads Tax Act
- Creates the Digital Advertising Tax Act, which is a new tax that seeks to impose a 10% tax on taxpayers deriving more than $150 million in revenue derived from digital ads.
SB 3486 Worldwide Combined Reporting
- Under the Income Tax Act, creates an income modification concerning “Unitary Business Groups” to provide for a tax regime that requires the consideration of income from wherever derived and is not limited to United States sources of income or effectively connected income within the meaning of the Internal Revenue Code.
- The move would make Illinois a likely mandatory worldwide combined reporting state, something that is currently only a permissive option in about a dozen states in the country. Currently, only Alaska applies a WWCR mandate however it is very narrowly limited to the oil and gas sector.
SB 3376 Extremely High Wealth Mark to Market Tax Act
- Creates the Extremely High Wealth Mark-to-Market Tax Act, which imposes a new income modification for capital gains as they accrue annual for assets of over $1 billion.
SB 3796 Omnibus Tax Credit Repeal, Adds Income Modifications
- Eliminates several tax credits currently in effect, including the Blue Collar Jobs Act construction credits, the MM&E exemption on sales tax, and a biodiesel, renewable diesel, and biodiesel blend sales tax exemption.
- In addition, the proposal seeks to “close” several federal “tax loopholes” on corporate taxpayers.
Illinois Municipalities Push Back on Governor’s Housing Plan with Alternative Proposal
As Illinois leaders grapple with rising housing costs, a proposal from Governor Pritzker to boost home construction statewide is drawing sharp resistance from local governments, which argue the plan oversteps municipal authority and overlooks more practical ways to improve affordability.
The Illinois Municipal League (IML), which represents 1,294 cities and villages across the state, has responded with its own framework—the Reducing Expenses and Advancing Local Housing (REAL) Act—intended to counter the governor’s Building Up Illinois Developments (BUILD) initiative.
Governor Pritzker introduced BUILD during his February State of the State address as part of a broader effort to address a housing shortage estimated at more than 140,000 units. The plan focuses heavily on increasing supply by easing zoning restrictions, accelerating permitting, and lowering construction costs. It also includes demand-side support, such as $50 million for down-payment assistance.
Local officials, however, say the proposal leans too heavily on limiting municipal control over zoning decisions. “The Governor’s BUILD program is at least 80% about pre-empting local zoning authority,” said Brad Cole, CEO of the Illinois Municipal League. “We thought it was supposed to be about affordability.”
Cole argues the state’s approach does little to directly reduce costs and instead shifts decision-making power away from communities—particularly when it comes to zoning rules that often restrict multi-family housing in areas historically dominated by single-family homes.
In contrast, the REAL Act emphasizes local flexibility. The proposal calls for preserving municipal authority over zoning, land use, and parking requirements, while ensuring housing development aligns with existing infrastructure capacity. It also underscores the need for tailored solutions in a state with diverse urban and rural housing markets.
“This isn’t a one-size-fits-all issue,” Cole said, adding that local leaders are best positioned to determine how and where housing should be developed.
The REAL proposal also includes several cost-focused measures, such as exempting homebuilding materials from state sales taxes—an idea Cole estimates could save roughly $5,000 per $100,000 in construction costs—and encouraging property tax relief through adjustments to the Local Government Distributive Fund.
Another controversial provision would cap residential real estate commissions at 3%, roughly half of the traditional structure in which buyer and seller agents each receive about 3%. The idea comes amid ongoing scrutiny of commission practices following a federal jury verdict involving the National Association of Realtors and major brokerages over allegations of collusion to keep fees high.
Supporters of the governor’s plan, including the Illinois Realtors, have pushed back strongly on the municipal league’s proposal. A spokesperson for Pritzker said a coordinated statewide strategy is necessary to meaningfully address the housing crisis, arguing that BUILD establishes baseline expectations while still allowing communities to maintain their character.
Illinois Realtors CEO Jeff Baker was more direct, calling the REAL Act “a wish list of anti-real estate measures” and warning it could undermine progress on housing development.
Cole, however, maintains that the state’s plan overlooks a key driver of housing costs. “The BUILD program doesn’t once say the words ‘property taxes,’” he said. “But property taxes are part of what’s making housing cost so much.”
With both sides now promoting competing visions, the debate highlights a fundamental divide over how to balance statewide housing goals with local control—an issue lawmakers will need to resolve as they consider next steps.
Mayors Urge Governor Pritzker to Reconsider Local Funding
Local leaders across Illinois are renewing their push for increased state support after Governor JB Pritzker proposed holding a key revenue-sharing program flat in his latest budget.
At issue is the Local Government Distributive Fund (LGDF), which allocates a portion of state income tax revenues to municipalities and counties. Under Pritzker’s proposal, the share of income taxes directed to LGDF would decline from 6.47% to 6.23%, keeping total funding at roughly $2.3 billion in fiscal year 2027—about $60 million less than it would be otherwise.
The governor’s overall $56 billion budget represents modest growth of about 0.5% in most areas, but local officials argue that flat funding for LGDF effectively amounts to a cut given rising costs. “Flat funding is not neutral,” said Sheila Chalmers-Currin, who also serves as village president of Matteson. “Flat funding during a time of rising costs is a cut.”
The Illinois Municipal League (IML), which represents communities statewide, is instead calling for LGDF funding to increase to $3.7 billion. Leaders say the current proposal continues a long-term decline in the state’s commitment to sharing revenue with local governments. “This is the continuation of a long-term erosion of state revenue sharing,” Chalmers-Currin said.
Local officials argue that reduced state support forces municipalities to make difficult tradeoffs—either cutting services or raising local taxes. “When the state reduces shared revenue, costs do not disappear,” she said. “They shift to property taxes, local sales taxes, or service reductions.”
IML leaders also contend that the proposal undercuts broader affordability efforts. “You cannot talk about affordability while also cutting the revenue that funds essential local services,” Chalmers-Currin said. “If we want meaningful property tax relief, the state must stop reducing the dollars shared with municipalities.”
The dispute over LGDF dates back decades. When Illinois first enacted a state income tax in 1969, local governments received 10% of the revenue. Although the income tax rate has increased over time—from 2.5% then to 4.95% today—local governments’ share has steadily declined.
A major shift came in 2011, when the state raised the income tax rate from 3% to 5% but reduced LGDF’s share to 6%. While that change kept overall dollar amounts relatively stable at the time, local leaders say it marked the beginning of a longer-term funding gap.
According to IML data, municipalities have received roughly $13 billion less over time than they would have under the original 10% formula. In recent years, the LGDF share has remained between 6% and 7%, never returning to its earlier level.
“In the last couple of decades, the state’s budget has grown from $30 billion to $56 billion,” said IML CEO Brad Cole. “During that time, we’ve effectively lost about a billion dollars a year in funding. This is a question of priorities.”
The governor’s office disputes the characterization that local governments are being shortchanged, pointing to broader increases in state support since Pritzker took office.
According to the administration, revenue sharing with local governments has increased by nearly $1 billion since 2019—a roughly 71% jump. Officials also highlight more than $2.5 billion in ongoing annual resources tied to policy changes such as transportation funding, cannabis legalization, expanded gaming, and other revenue streams.
The administration has also emphasized steps to give municipalities greater fiscal flexibility, including expanded authority to impose local sales taxes without voter referendums and the elimination of certain state administrative fees.
In addition, some communities—particularly those with public transit systems—are expected to see increased funding in fiscal year 2027 under a revised transit funding formula.
Despite those additional resources, local leaders maintain that LGDF remains a critical and reliable funding source for core services. With budget negotiations ongoing, they are continuing to press lawmakers to revisit the proposed reduction and provide a larger share of state income tax revenues to municipalities.
Governor Pritzker Announces $56 Million in Available Grant Funding for Community Development Block Grant Programs
Governor JB Pritzker and the Illinois Department of Commerce and Economic Opportunity (DCEO) today announced $56 million in funding is available for the Community Development Block Grant Program (CDBG) for Public Infrastructure ($25 million), Housing Rehabilitation ($15 million), Community Revitalization ($13 million), and Emergency Assistance ($3 million). Grantees will be selected through a competitive Notice of Funding Opportunity (NOFO) process.
“Here in Illinois, we’re committed to improving our infrastructure, our housing options, and our people’s quality of life,” said Governor JB Pritzker. “From public water systems to homes for our working families, these Community Development Block Grant Program investments will transform lives across the state. I encourage all eligible entities to apply for this critical grant funding.”
“Every community—no matter its size or zip code—deserves safe infrastructure, stable housing, and the opportunity to thrive,” said Lieutenant Governor Julina Stratton. These investments will help uplift working families, strengthen neighborhoods, and ensure that all of Illinois can share in our state’s growth and opportunity. By targeting resources where they are needed most, we’re building a stronger, more resilient future for communities across our state.”
Community Development Block Grant for Public Infrastructure
Public Infrastructure grants are designed to provide communities with funding to improve public infrastructure, public health and quality of life. These projects include construction of storm sewer pipes, waterline replacements, and water storage tank construction, and other critical projects that help mitigate flooding and support sewage management, water delivery and other public water necessities.
Community Development Block Grant for Housing Rehabilitation
Housing Rehabilitation grants are designed to assist low-to-moderate income homeowners with improvements to ensure safe and sanitary living conditions. Eligible uses of funds include structural work, lead remediation, electrical, plumbing, new appliances, flooring, ADA and accessibility accommodations, and more.
Community Development Block Grant for Community Revitalization
Community Revitalization grants are a new addition to the CDBG Grant Program. Community Revitalization grants are designed to address structures that pose a health and safety hazard, crumbling sidewalks and streetscapes that make pedestrian traffic difficult, commercial facades with deferred maintenance, preservation of historic structures that tell their story, and closed buildings that could be used for new purposes.
An additional $3 million is available for Emergency Assistance projects funded by the Community Development Block Grant on an as-needed basis.
“The success of the Community Development Block Grant Program has been essential to ensuring all of Illinois’ communities are safe and healthy,” said DCEO Director Kristin Richards. “This funding opportunity will build upon the State’s commitment to improving the quality of life for all Illinoisans.”
Eligible applicants can apply for Public Infrastructure grants from $300,000 to $1.5 million, Housing Rehabilitation grants from $300,000 to $800,000, and Community Revitalization grants from $250,000 to $2 million. Applications for both Public Infrastructure and Housing Rehabilitation grants will be accepted until August 27, 2026, at 5:00 p.m. Applications for Community Revitalization funding will be accepted on a rolling basis once the Notice of Funding Opportunity is posted. DCEO will be hosting an Application Workshop and Technical Assistance webinar for Public Infrastructure and Housing Rehabilitation grant applicants on May 7, 2026, at 1:00 p.m. Interested applicants can register and find more information on the DCEO website.
The Community Development Block Grant (CDBG) Program was established by the U.S. Housing and Community Development Act of 1974 (“HCD Act”). These state-administered funds are earmarked exclusively for non-metropolitan communities that do not receive CDBG entitlement funding from the U.S. Department of Housing and Urban Development (HUD). All projects must meet a CDBG National Objective as defined by HUD.
Illinois Treasurer Michael Frerichs Relaunches State Retirement Program for Small Businesses with Lower Fees and New Name
Illinois State Treasurer Michael Frerichs today announced lower fees and technology improvements for employers and savers of the Illinois Secure Choice Savings Program, which will take effect in June 2026.
“A decade ago, too many Illinois workers didn’t have an easy way to save for retirement at work, so we set up a low-cost solution,” Frerichs said. “Now, workers have saved more than $300 million thanks to our Secure Choice retirement program. But we are always looking to improve, and today, we are cutting fees, making it cost less so they can save more.”
Next month, the Illinois Secure Choice retirement program will become My Illinois Savings. Frerichs’ office facilitates the retirement savings program for private-sector workers. Research has consistently shown that retirement benefits both attract and retain employees. My Illinois Savings gives Illinois private-sector employers an easy way to offer a valuable retirement savings benefit with no charge to their business.
“Today we are helping more than 170,000 workers across all 102 counties save and grow their own money so that they can eventually retire and enjoy their golden years,” Frerichs said.
“As small business owners, we’re pulled in a lot of different directions. At Green Paws Chicago, we’ve been intentional about building a professional W-2 workforce, including giving our employees access to long-term savings and retirement growth.
My Illinois Savings helps us stay compliant, offers a meaningful benefit to our team, and does it without adding to our administrative workload,” Robb Hendrickson, Co-founder, Green Paws Chicago.
The improvements come as the program transitions to Vestwell as its new program manager, beginning June 15, 2026. Vestwell, a leading provider of Auto IRA programs, was selected by the Treasurer’s Office through a competitive bidding process and will oversee day-to-day operations, including online account access, contribution processing, customer service, and investment administration.
“During a period of widespread financial anxiety when people are feeling particularly fragile, state programs like My Illinois Savings demonstrate the value of public-private partnerships. By enabling people of modest means to own stocks, savings, and retirement accounts, these programs help build wealth and provide accessible financial resources. While not solving every financial challenge, they make financial security more attainable for Illinoisans,” shared Horacio Mendez, president and CEO of the Woodstock Institute.
“Illinois continues to lead the way and expand access to retirement savings,” said Douglas Magnolia, Chief Revenue Officer & President, Vestwell Government Savings at Vestwell. “State-facilitated programs like My Illinois Savings are critical to closing the retirement savings gap, and these updates make it easier for more workers, especially those at small to mid-size businesses who may not have access to retirement plans, to build long-term financial security.”
“I appreciate that My Illinois Savings makes saving feel simple. My account stays with me if I change jobs, and using a target date retirement fund means I don’t have to manage it day to day. It feels good knowing that a little from each paycheck is in the background and helping me build something for the future,” Katey Prado, Head of Client Experience, Green Paws Chicago
“AARP Illinois, on behalf of its 1.7 million members, was proud to help make My Illinois Savings a reality from the start. This groundbreaking program remains a national model for expanding retirement savings access for workers without traditional options. But with many Illinoisans still not saving and anxious about their financial future, we are committed to ensuring that the program reaches more workers so they can build long-term security with dignity and peace of mind.” Philippe Largent, State Director, AARP Illinois
What Is Changing — and What Remains the Same
Beginning June 15, 2026, Secure Choice will be renamed to My Illinois Savings when the retirement program transitions to a new recordkeeping platform, delivering a more streamlined experience for both employers and savers.
An upgraded employer portal will offer automated payroll deductions and contribution submissions through integrations with some of the country’s largest payroll providers, including Gusto, Paychex, and QuickBooks Online. The saving experience will become easier, too. My Illinois Savings will have a new, easy to use online portal and a mobile app. This program transition makes My Illinois Savings one of the lowest-cost Auto IRA programs for savers.
What remains unchanged:
- Workers save through automatic payroll deductions into a Roth IRA that they own and control.
- Employers facilitate the program but do not contribute, pay program fees, or have fiduciary responsibility.
“For nearly ten years we have been helping employees and employers. Today we are improving the program by lowering costs and improving the experience for savers,” Frerichs said. “Their retirement savings belong to them and will stay with them throughout their careers, even if they change jobs.”
Key Dates and Transition Information
The transition will take place from June 11 at 3 p.m. CT through June 14, 2026. During that period, no contributions, withdrawals, or transactions will be processed.
The new system, including employer and saver access, will go live on Monday, June 15, at 8 a.m. CT. Key dates for 2026:
- April 30 – Last day to add new employees in the current system
- June 5 – Last day to submit payroll contributions in the current system
- June 11 (3 p.m. CT) – Blackout period begins
- June 15 (8 a.m. CT) – New system goes live
Saver accounts and investment selections will automatically be transferred to the new system. After launch, employers and savers will need to retrieve their accounts through the new portal to view balances, update information, and manage payroll contributions.
- More information is available at: www.ilsecurechoice.com/home/conversion
About Illinois Secure Choice / My Illinois Savings
My Illinois Savings, formerly Illinois Secure Choice, is a state-facilitated retirement savings program for private-sector workers. It offers an individual retirement account, or IRA, for people who do not have access to a retirement plan through work, are self-employed, or want a simple way to save on their own.
Workers can save through payroll deduction or self-funding, helping them prepare for retirement.
Workers do not need to enroll through an employer to participate. Someone who is self-employed, freelance, or whose employer is not registered with the program can open an account if they are otherwise eligible to open an IRA.
Participants can change their contribution rate, choose investment options, or opt out at any time. Employers do not contribute to employee accounts, do not pay program fees, and are not responsible for managing the program.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct