“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
In Illinois, approaching the last hours of the legislative session with a number of important items still unresolved is not unusual. The May 31 deadline isn’t a complete stop, rather a time stamp for the percentage of votes needed. Missing the mark just means the need for a 60% majority vote for anything to be in effect by 6/1/27. With that said, this session did indeed go into overtime if you hadn’t heard.
Illinois lawmakers worked into the early morning on Monday to send Governor Pritzker a nearly $56 billion spending plan. The FY2027 Budget makes some important investments and advanced several important pro-growth initiatives including the extension of the Research and Development Tax Credit, River’s Edge Program, the Pass-Through Entity tax election, and the Angel Investment Tax Credit. All will help support innovation, entrepreneurship, and capital investment across Illinois.
While the FY2027 Budget includes several meaningful investments, it also featured a reliance on a number of burdensome tax proposals to achieve balance. Measures such as the changes to the Net Operating Loss (NOL) deduction cap, along with revenue initiatives that are likely to face significant legal scrutiny, including the Targeted Advertising Services Tax Act, Digital Asset Tax and the Social Media Platform Fee. Each carries the risk of undermining Illinois’ competitiveness and sending an unfavorable signal to employers, investors, and job creators considering long-term commitments in our state.
More on the budget and a whole lot more below in this packed edition of the roundup. But first, an invite to two upcoming programs that you should find interesting:
First, A Lunch & Learn Opportunity: Joliet Economic Analysis Report on Wednesday, June 17 at Harrah’s. How do planning, development, and infrastructure decisions impact a city’s financial future? Join nationally recognized urban planner Joe Minicozzi of Urban3 as he presents a compelling analysis of Joliet’s fiscal health and explores the connection between land use, economic development, placemaking, and long-term community sustainability.
Second, A Member Breakfast: Illinois Legislative Update – Budget and Beyond with local State Senators Ventura and Loughran Cappel as well as State Representatives Walsh Jr. and Avelar. This will take place on Wednesday, June 24 at the Holiday Inn & Suites Joliet Southwest.
*Government Affairs Roundup brought to you by CITGO*
FY2027 State Budget Finalized
Illinois lawmakers passed a nearly $56 billion state budget early Monday morning after debating into the overnight hours in an extended spring session. The plan aims to increase food assistance in response to federal funding cuts without placing additional burdens on “everyday working families,” according to Democratic leaders in Springfield.
The budget process unfolded rapidly over the weekend. A 51-page spending outline was introduced Saturday as an amendment to House Bill 111, followed by a 1,623-page revenue package added Sunday to Senate Bill 3019. The final vote on the spending plan came at 4:13 a.m. Monday, passing the House 76-39 after clearing the Senate 37-21. If signed by Governor Pritzker, the budget will take effect July 1.
The agreement includes a 3.2% cost-of-living raise for state lawmakers, pushing the average base salary above $101,000. It also reflects a volatile backdrop, as the spring session was shaped by economic uncertainty, federal policy changes, and geopolitical tensions, including the war in Iran. Budget analysts for both the General Assembly and governor’s office had already lowered revenue expectations in recent weeks amid growing economic pessimism.
The fiscal year 2027 budget is essentially flat, incorporating an $830 million supplemental spending plan for the current year. However, it relies on a mix of new taxes, fund sweeps, and policy changes to balance the books.
New revenue measures target emerging and digital industries, including taxes on prediction markets, cryptocurrency, fantasy sports, digital advertising, and social media platforms. Lawmakers also limited certain income tax carryover deductions and increased the tax on retail tire sales from $2 to $2.50.
Not all of the proposed taxes are expected to generate immediate revenue. Budget leaders anticipate legal challenges to several measures, particularly a new Targeted Advertising Services Tax—commonly known as a digital ad tax—and a social media tax modeled after one currently tied up in court in Chicago. While the state is not counting on revenue from the ad tax in fiscal year 2027, officials estimate about $200 million from the social media tax.
Two major proposals from Governor Pritzker’s February budget were included: lowering the cap on corporate net operating loss deductions and implementing a social media tax based on Illinois user counts. Together, these are expected to generate about $500 million. Social media companies would be taxed on a progressive scale, starting at 10 cents per user per month for platforms with at least 100,000 users and rising to a $165,000 base fee plus 50 cents per user monthly for platforms exceeding 1 million users.
Additional taxes include a 15% levy on fantasy sports operators—paired with a new licensing system—and taxes on digital asset sales, expected to generate $65 million. Sports bets on prediction markets and remote tobacco retailers would also face new taxes. The tire tax increase will primarily fund a waste disposal program.
Despite calls for broader progressive tax reforms, such as higher taxes on corporations and billionaires or decoupling from the federal tax code, lawmakers instead froze corporate net operating loss provisions and expanded targeted taxes across specific industries. The budget does not eliminate tax incentives for data centers, despite earlier proposals from Pritzker.
To address affordability concerns, the plan delays a scheduled 1.3-cent gas tax increase from July 1 to January and creates a sales tax holiday on school supplies from Aug. 7–16. The motor fuel tax will remain at 48.3 cents per gallon for six months instead of rising to 49.6 cents, effectively freezing the tax through Jan. 1, 2027. Surplus gas tax revenue, however, will be redirected into general operating funds.
The budget includes $143 million for a healthcare program serving undocumented immigrant seniors and $4 million for immigrant welcoming centers. Some lawmakers questioned why nearly $150 million in gas tax revenue would be swept while similar amounts are allocated to those programs.
Spending also relies heavily on fund sweeps. One proposal transfers $70 million from the BRIDGE program—created to offset federal funding gaps—into the Fund for Illinois’ Future for infrastructure and grants, often tied to projects in Democratic legislative districts. However, the spending bill simultaneously directs $70 million from the same BRIDGE Fund to a new food assistance initiative, causing confusion during House debate.
That initiative, known as the Families Receiving Emergency Support for Hunger (FRESH) Program, provides a one-time $400 payment to residents who lose or see reductions in Supplemental Nutrition Assistance Program (SNAP) benefits due to new federal eligibility rules. The one-year program is expected to cost about $70 million.
Overall, the budget includes about $65 million in reductions to government operations, with officials noting no layoffs are planned. Rep. Robyn Gabel, D-Evanston, emphasized that the plan avoids shifting costs onto working families or cutting essential services.
The Local Government Distributive Fund remains at 6.47% of state income tax revenues, rejecting Pritzker’s proposal to reduce it to 6.23%.
In education, the budget fully funds the state’s Evidence-Based Funding model for K-12 schools, including a property tax relief component. However, districts receiving funds must freeze property tax increases for three years instead of two. Higher education will receive only a 1% funding increase, marking the second consecutive year of growth below inflation.
Direct service providers will see a 60-cent wage increase—half of the recommended amount—and the budget does not add to the state’s “rainy day” fund.
Long-term fiscal concerns remain, particularly around pensions. Contributions to state pension systems will reach nearly $12 billion in fiscal 2027, but actuaries estimate at least $17 billion is needed to adequately fund the systems and reduce Illinois’ $143.5 billion pension debt. The $5 billion shortfall is expected to continue putting pressure on future budgets.
Democratic leaders defended the plan as a targeted response to economic uncertainty and reduced federal support. “We’ve constructed a budget that meets people’s most pressing needs,” Gabel said, pointing to investments made despite federal retrenchment.
Senate budget negotiator Sen. Elgie Sims added that the plan avoids tax increases on working families and aims to ease financial pressures.
However, criticism came from both sides. Progressive Democrats argued the budget does not go far enough in funding education, healthcare, and public services. Republicans objected to the overall spending increase from last year’s $55.2 billion budget and the reliance on new taxes.
Illinois Passes AI Safety Bill
Illinois lawmakers approved a bill requiring major AI developers such as OpenAI, Anthropic, and Google DeepMind to undergo independent third-party audits of their safety practices, an approach experts say would make it the most stringent state-level AI safety law in the country.
The legislation, Senate Bill 315, now heads to Governor Pritzker, who said on social media that he intends to sign it, citing the need to hold Big Tech accountable.
If enacted, the law would require frontier AI labs to have external auditors verify that they are following their own stated safety standards. Until now, no independent entity has been required to formally validate AI companies’ internal safety claims.
“We’re in a situation where the AI companies grade their own homework,” said Scott Wisor, policy director at the Secure AI Project, which supports the bill. “SB 315 would require an independent auditor to check whether AI labs actually adhere to their safety commitments.”
Under the proposal, companies could rely on major accounting firms such as Deloitte, EY, KPMG, and PwC, or smaller specialized groups like METR, Transluce, and Averi, to conduct evaluations of compliance with safety standards.
State Rep. Daniel Didech, a sponsor of the bill, said state governments are increasingly shaping national AI policy in the absence of federal action. “Laws like this create a world where it’s more likely for the federal government to pass something,” he said.
With Congress stalled on comprehensive AI legislation, states have become the primary battleground for regulating the technology. Support for stricter oversight has grown alongside public concern over AI’s rapid expansion and its impact on jobs, safety, and misinformation.
Other states, including California and New York, have already enacted AI transparency laws requiring companies to disclose safety practices and report incidents. Illinois’ bill goes further by mandating independent audits rather than relying on company disclosures alone.
Industry and advocacy groups have increasingly focused their lobbying efforts at the state level as a result. OpenAI global affairs chief Chris Lehane told WIRED the company’s policy strategy now includes engaging directly with state legislatures on AI rules.
Illinois has become a key arena in the national debate over AI regulation. OpenAI previously backed earlier Illinois legislation but later clarified its position before endorsing SB 315. Lehane said in a statement that the company supports “clear expectations around safety, transparency, incident reporting, and accountability” as AI systems become more advanced.
Anthropic also expressed support, saying the bill would help establish “a baseline that every leading AI developer is expected to meet,” according to its head of U.S. state and local government relations, Cesar Fernandez.
However, some industry groups strongly oppose the measure. The Chamber of Progress, a tech trade group whose members include Google, Apple, Amazon, and Andreessen Horowitz, urged lawmakers to reject the bill, arguing it would force companies to expose sensitive systems to untested auditors without clear standards.
The state-level push comes amid shifting federal policy. President Trump has signaled opposition to a fragmented “patchwork” of state AI rules, arguing they could weaken U.S. competitiveness against China. His administration has rolled back several Biden-era AI regulatory efforts and recently canceled a planned executive order on AI policy, citing concerns about overregulation.
Springfield Delays Swipe Fee Law Again
Illinois lawmakers have once again delayed implementation of the Interchange Fee Prohibition Act (IFPA), a controversial 2024 law that would prohibit credit card companies from charging interchange fees on the tax and tip portions of transactions. The latest action pushes the effective date to July 1, 2027—two years beyond the original timeline and the second delay approved by the Legislature.
The law has been the subject of an ongoing battle between the banking and retail industries. Retailers argue the measure would save businesses significant costs, while banks contend it would disrupt the payments system. Lobbyists for the banking industry welcomed the delay, though they continue to push for full repeal.
“This latest delay is yet another acknowledgment that lawmakers rushed through a deeply flawed law without fully understanding the consequences,” said Electronic Payments Coalition Executive Chairman Richard Hunt. “Delaying the chaos is not the same as fixing it.”
The dispute has also moved through the courts. In April, the U.S. Office of the Comptroller of the Currency (OCC) issued a rule aimed at protecting federally chartered banks from the law, though Illinois-chartered banks would still be subject to its requirements. Retailers backing the law argued the federal move runs counter to broader efforts to reduce credit card fees.
Following the OCC’s action, a federal appeals court sent the banking industry’s lawsuit—filed nearly two years ago—back to a lower court for reconsideration in light of the new rule. U.S. District Judge Virginia Kendall, who had previously ruled the law could take effect, revisited the case after the OCC clarified its regulations.
Originally, Kendall found that interchange fees, set largely by card networks like Visa and Mastercard, were not preempted by federal law. However, the OCC subsequently revised its rules to explicitly allow national banks to impose fees set by third parties, creating a direct conflict with Illinois’ law.
In a new ruling issued Monday, Kendall concluded the updated federal regulations preempt the IFPA for national banks, federal savings associations, payment networks, and out-of-state banks. That decision casts significant doubt on the law’s future, even as it remains applicable to Illinois-chartered banks and credit unions.
The Electronic Payments Coalition, which has backed a statewide “Credit Card Chaos” advertising campaign, praised the ruling but warned it creates an uneven playing field. “Credit unions and Illinois-chartered banks remain subject to IFPA, creating ongoing uncertainty and the risk of inconsistent treatment,” the group said.
Kendall had previously issued a narrower injunction on a separate provision of the law related to data collection, applying it only to certain financial entities.
At the center of the dispute is how interchange fees work. Each time a consumer uses a credit or debit card, the merchant’s bank pays a fee—typically around 1% to 2% of the transaction—to the cardholder’s bank. These fees include both a flat amount and a percentage, and are largely set by payment networks such as Visa and Mastercard.
The Illinois law would prohibit applying those fees to the tax and tip portions of a purchase. Both sides estimate the financial impact could range from $120 million to $200 million annually, benefiting retailers while reducing revenue for financial institutions. If implemented, Illinois would be the only state with such a policy.
Banks argue the law would force them to guarantee payment for the full transaction while only collecting fees on part of it, potentially destabilizing the system. They have also mounted an extensive lobbying and advertising campaign this year, including television ads, signage, and text messaging to reach consumers.
Despite the legal uncertainty, lawmakers moved forward with another delay during the final hours of the spring legislative session. The measure passed just before adjournment, alongside broader budget legislation.
The timing was notable: Kendall issued her latest ruling only hours after the General Assembly approved the delay. Her decision underscores the growing legal complexity surrounding the law and raises further questions about whether it can ultimately be implemented.
What happens next remains unclear. Additional court proceedings are expected, and both supporters and opponents are weighing their legal and legislative options as the fight over interchange fees continues.
Insurance Regulation Bills Head to Governor’s Desk
Two major insurance reform bills have cleared the Illinois General Assembly, giving the state Department of Insurance new authority to review and regulate premiums for homeowners and automobile coverage. Both measures now await the signature of Governor Pritzker, who has indicated support.
“Too many families have dealt with unexplained, unfair insurance price hikes on their homes and cars,” Pritzker said in a statement. “This legislation helps protect consumers while maintaining the core principles the Illinois business community is built on.”
The legislation builds on Pritzker’s broader effort to expand oversight of the insurance industry. In 2023 and 2024, he secured similar authority for the state to review and approve rates for small- and large-group health insurance plans.
The push for reform gained momentum last year after Bloomington-based State Farm announced an average 27.2% increase in homeowners’ insurance rates across Illinois. At the time, Pritzker argued insurers were shifting disaster-related losses from other states onto Illinois policyholders—an allegation the industry disputes.
Illinois is currently one of the few states without a law prohibiting “excessive, inadequate, or unfairly discriminatory” insurance rates, a gap the new legislation aims to address.
Homeowners insurance changes
The homeowners insurance provisions are contained in House Bill 4273, which passed the House 72-38. The bill requires insurers to provide at least 60 days’ notice before increasing premiums by more than 10%.
It also prohibits excessive or discriminatory rates and gives the Department of Insurance authority to review filings to ensure compliance. While insurers can still implement new rates immediately upon filing, the department will have 60 days to review them. If a filing is found to violate the new standards, regulators can require refunds of excess premiums and block the rate.
The bill also bars insurers from “cost-shifting,” requiring rates to be based on Illinois-specific loss data rather than losses incurred in other states. The provisions apply to policies and filings beginning July 1, 2027.
Automobile insurance changes
A similar framework applies to auto insurance under Senate Bill 714, which passed the House 70-38.
The measure prohibits excessive or discriminatory rates and strengthens the Department of Insurance’s authority to review filings, challenge unjustified increases and require rebates when necessary. Insurers must provide at least 30 days’ notice for premium increases greater than 10%.
The bill also prohibits passing along out-of-state disaster costs to Illinois drivers and expands access to discounts for drivers age 55 and older who complete approved defensive driving courses.
Unlike earlier proposals, however, the final bill does not ban insurers from using factors such as ZIP codes or credit scores when setting rates, an issue raised by Secretary of State Alexi Giannoulias during the debate.
Giannoulias said the legislation still achieves its core goal of improving fairness and transparency. “We’re now prohibiting rates that are excessive or discriminatory so that pricing reflects actual risk rather than hidden formulas,” he said.
Industry pushback
Insurance industry groups, including the Illinois Insurance Association, the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies, warned the measures could have unintended consequences.
They argue the legislation does not address the underlying drivers of rising premiums, such as higher repair costs, severe weather and litigation trends, and could ultimately reduce market competition, leading to higher costs and fewer coverage options over time.
Both bills were sponsored in the House by Rep. Thaddeus Jones and are scheduled to take effect July 1, 2027, pending the governor’s approval.
Megaprojects/Bears Stadium Deal Stalls
Last week I mentioned that the original bill was diminishing in terms of how many sites/opportunities would be wrapped up in the legislation. A last-minute effort to create a new framework to keep the Chicago Bears in Illinois ended up clearing the Senate but stalled in the House, leaving the team’s future uncertain as lawmakers ran out of time in Springfield.
The Illinois Senate approved the proposal 37-17 late Sunday night, but the House declined to call the bill after an aggressive overnight push failed to secure enough support for a measure members had little time to review. House Speaker Emanuel “Chris” Welch said discussions will continue, with the possibility of a special summer session still in play.
The legislation was not publicly filed until after 11 p.m. Sunday and was structured to allow passage after midnight with a simple majority—though that would delay its effective date until June 1, 2027. Despite the late-hour momentum, House leaders opted not to advance a bill without assured votes.
The proposal marked a significant shift in strategy after lawmakers abandoned the Bears’ long-sought property tax break, which had lost support in the Senate. In its place, negotiators introduced a new model allowing both Arlington Heights and Chicago to create stadium authorities designed to keep the team from relocating to Indiana.
Sen. Bill Cunningham, the lead Senate negotiator, said the revised framework “would give the Bears what they want” by enabling a publicly owned stadium structure. Under the plan, municipalities in Cook County with populations over 70,000 could form a stadium authority with the power to issue bonds, make loans, own a stadium and enter into leases of at least 35 years with professional sports teams.
If the Bears pursued a project in Arlington Heights under this model, they could transfer ownership of their land to the authority, making it tax-exempt. “Publicly owned buildings do not pay property taxes, so that is exactly what the Bears have asked for,” Cunningham said, noting the team has previously said it could privately finance stadium construction.
The bill also allows municipalities to create Sales Tax and Revenue (STAR) bond districts, dedicating state and local sales tax revenues to support infrastructure tied to stadium development. While crafted with the Bears in mind, the authority structure could also be used by other teams, including the Chicago White Sox and Chicago Stars FC.
However, the proposal leaves open the possibility that local governments could commit public funds, as the authority would have broad powers to issue bonds, potentially for up to 40 years, and provide financing support. Cunningham said that, based on the Bears’ stated willingness to fund construction privately, public contributions should not be necessary.
Governor Pritzker’s office helped shape the framework, though the governor did not take a formal position before the vote, saying the proposal required further review. Cunningham said Pritzker signaled support for the process.
The Bears themselves did not actively lobby for the measure as the legislature moved into overtime and did not comment during negotiations. After the House declined to act, the team said it would continue evaluating both its Arlington Heights site and a competing proposal in Hammond, Indiana, near the Lost Marsh Golf Course, with a decision expected in the coming months.
The new approach closely resembles Indiana’s publicly owned stadium model, a competing offer that has intensified pressure on Illinois lawmakers. The Bears purchased the former Arlington International Racecourse site for $197 million in 2023 and have been pursuing incentives tied to that location for years.
That earlier plan centered on freezing the team’s property tax assessment and allowing negotiated payments in lieu of taxes (PILOT) with local taxing bodies. While that structure would have provided some local control, it was projected to save the team tens of millions annually. Support for the idea collapsed in the Senate.
“I had a senator say to me that that approach further breaks an already broken property tax system,” Cunningham said, explaining the pivot to a new model.
Rep. Kam Buckner, Cunningham’s House counterpart, said the stadium authority concept had been discussed previously but resurfaced as lawmakers ran out of time. “As we find ourselves up against the clock, some of those older ideas have come back to the fore,” he said.
The new framework also reopened the door for Chicago to compete for the team, drawing interest from city lawmakers. However, the city had not taken a formal position as it worked through the details.
Mayor Brandon Johnson has been seeking greater control over the Illinois Sports Facilities Authority (ISFA), which owns Rate Field and financed renovations to Soldier Field. ISFA’s debt—backed by state and city payments and a hotel tax—still totals roughly $500 million. Cunningham said there is no support in Springfield to transfer that authority to the city, emphasizing that existing bonds should continue to be paid down.
The bill also directed the Illinois Department of Transportation to study infrastructure and traffic needs around the Museum Campus before any stadium construction proceeds.
Notably absent from the Senate plan were several Chicago-focused incentives included in a House-passed proposal earlier this spring. Those provisions included support for major developments like One Central, the Michael Reese site and a proposed railyard project tied to potential future White Sox ownership.
That earlier bill also created new financing tools, including Railroad Rehabilitation Economic Development Yards (RREDY) incentives and expanded STAR bond programs, along with “NOVA” urban districts that would capture hotel tax growth to back large-scale developments. Projects investing at least $1 billion could have accessed up to $1.6 billion in bond financing, or 75% of project costs.
None of those provisions made it into the Senate’s revised framework, and they will not advance this session. For now, the Bears’ future remains unresolved, with Illinois and Indiana still competing for the franchise as lawmakers weigh whether to revisit the issue in the months ahead.
Anticipated Revenue Items
$300 million from corporate tax changes (net operating losses)
The largest immediate revenue increase comes from extending Illinois’ cap on net operating loss (NOL) deductions, raising corporate income taxes by an estimated $300 million in fiscal year 2027. The cap was originally enacted in 2021 to stabilize revenues during the pandemic as many companies reported losses.
Instead of phasing out, the cap will continue beginning in tax year 2027, limiting deductions to 15% of net income or $500,000, whichever is greater. The cap will gradually increase to 30% in 2028, 50% in 2029, 65% in 2030 and 80% in 2031.
NOL deductions are designed to ensure businesses are taxed fairly over time despite fluctuations in profitability. Limiting them can raise effective tax rates above the statutory rate. Illinois is one of only three states—along with Pennsylvania and New Hampshire—that impose such caps, adding to what is already the nation’s second-highest corporate income tax rate.
$200 million from social media fees
Lawmakers approved a new fee on large social media platforms, projected to generate $200 million. The fee ranges from $0.10 to $0.50 per Illinois user per month, depending on the size of the platform’s user base.
While the law attempts to prevent companies from passing costs to consumers, critics argue the burden will ultimately fall on Illinois residents through higher prices or reduced services.
$60 million from digital asset taxes
Starting Jan. 1, 2027, Illinois will impose a 0.2% tax on digital asset transactions, including cryptocurrency exchanges, transfers, storage and custodial services. The tax applies to brokers with a physical presence in Illinois or at least $100,000 in annual in-state digital asset revenue.
Transactions are considered to occur in Illinois if the customer is located in the state or if account data—such as address or IP—indicates Illinois as the primary place of use. Lawmakers estimate the tax will generate $60 million.
$50–$60 million from ending a federal tax alignment (QSBS)
Illinois will decouple from the federal Qualified Small Business Stock (QSBS) exemption, which currently allows capital gains from certain startup investments to be excluded from taxation. Under the change, those gains will be taxed at the state level.
The move is expected to generate between $50 million and $60 million annually, increasing costs for investors in qualifying small businesses.
$5 million from fantasy sports taxes
A new 15% tax will be applied to fantasy contest operators’ adjusted gross receipts—calculated as entry fees minus payouts to participants. This mirrors how gaming taxes are applied to operator profits rather than total wagers.
The tax is expected to generate about $5 million in fiscal year 2027.
$200 million to $800+ million from digital advertising tax
One of the most controversial measures is a new 10% tax on gross receipts from targeted digital advertising services, effective Jan. 1, 2027. It applies to companies generating more than $1 million annually from such services in Illinois.
Revenue estimates range widely from $200 million to more than $800 million. However, lawmakers are not relying on the revenue in the current budget due to anticipated legal challenges.
Opponents argue the tax may violate federal law, including the Internet Tax Freedom Act, as well as Illinois’ Uniformity Clause. They also warn it could be difficult to administer and may affect smaller businesses due to the relatively low revenue threshold. The state tax would also preempt local digital ad taxes, including a proposal previously advanced in Chicago.
POWER Act Stalls
Despite a strong show of support at the Illinois Capitol, legislation aimed at regulating data centers stalled before reaching a floor vote, setting up continued debate in the months ahead.
Hundreds of environmental, labor and community advocates, about 600 in total, gathered on the Capitol steps Saturday to rally behind the Protecting Our Energy, Water and Ratepayers (POWER) Act. But lawmakers had already acknowledged the proposal lacked the votes needed to advance in either chamber before the end of the spring session.
The POWER Act had emerged as one of the most closely watched proposals of the year, drawing backing from environmental justice groups and opposition from organizations tied to data center development.
The legislation would have required developers of large data centers to disclose environmental impacts, meet renewable energy requirements and report water and energy usage. It also aimed to increase transparency by prohibiting nondisclosure agreements and establishing industry-funded oversight programs.
Sen. Ram Villivalam, the bill’s Senate sponsor, urged supporters to keep pushing for the measure. “The organizing, the phone calls, the conversations with your neighbors, the emails we get, that’s how this bill gets done,” he said at the rally.
While the bill will not advance this session, advocates and lawmakers said the effort is far from over. Supporters plan to continue negotiations through the summer with stakeholders on both sides of the issue.
With the POWER Act sidelined, attention has shifted to Governor Pritzker’s proposal to pause a key tax incentive program for data centers. The governor first raised the idea in his February budget address as lawmakers grapple with the industry’s growing role in Illinois’ economy and energy system.
State Rep. Robyn Gabel, the House sponsor of the bill, argued the state should reconsider incentives for large, profitable companies. “The last thing we should be doing is handing out tax breaks and incentives to these corporations,” she said.
For now, the POWER Act’s failure to advance marks a pause, not an end, in Illinois’ ongoing debate over how to regulate the rapidly expanding data center industry.
BUILD Act Stalls
Governor Pritzker’s BUILD Act, his signature effort to boost housing supply by easing local zoning restrictions, stalled amid pushback from suburban officials and local leaders who argued it would weaken home-rule authority. The proposal had support from housing advocates and parts of the real estate industry.
In a statement, Pritzker’s office said the governor “will continue working with the General Assembly this summer on the BUILD initiative to increase housing supply and make it easier and more affordable to build the homes Illinois needs.”
The BUILD Act remains one of Pritzker’s top legislative priorities. He has promoted the plan at events statewide, while his campaign has run digital ads to build public support.
Meanwhile, Illinois Senate Democrats advanced their own housing package last week, incorporating elements of the BUILD proposal. Two key bills would allow “middle housing” by right in most residential zones and establish statewide timelines for permitting and inspections, including the use of third-party inspectors if municipalities miss deadlines.
All eight bills in the Senate package cleared the Senate Executive Committee, though lawmakers from both parties raised concerns and sponsors acknowledged further amendments are likely.
Despite the skepticism, Pritzker expressed optimism that a deal could come together. “A lot of things have been worked out,” he said, noting progress even within 24 hours of a contentious committee hearing.
“I’m actually very excited,” Pritzker added. “Most of what we’ve talked about is going to be in good shape… but until these things get up for a vote, you’re still dealing with changes around the edges.”
Local governments, led in part by the Illinois Municipal League, have pushed back with an alternative approach that would incentivize—rather than require—zoning changes. Pritzker dismissed that effort, saying, “They put something forward, it didn’t go anywhere.”
With the spring session over, the fate of the BUILD Act now likely hinges on continued negotiations this summer or potential action later in the year.
Lawmakers Pass Bill to Assist Homeowners to Avoid Losing Property Over Unpaid Taxes
After three years of noncompliance with a 2023 U.S. Supreme Court ruling, Illinois lawmakers have approved legislation that would significantly change how counties recover delinquent property taxes and protect homeowners from losing their equity.
For years, Illinois counties have sold delinquent property tax debt to investors, who can ultimately seize property if owners fail to repay what they owe. The U.S. Supreme Court ruled that it is unconstitutional for governments to keep surplus equity when a property is taken to satisfy a tax debt. Illinois is the only state affected by that ruling that has not yet reformed its system.
The Illinois House passed the measure late Saturday night on an 80-35 vote, following Senate approval on Thursday. The legislation now heads to Gov. JB Pritzker for his signature.
The bill, House Bill 4537, introduces a series of changes aimed at both compliance and homeowner protection, particularly in Cook County.
Under the measure, Cook County will continue holding annual tax sales for six more years, with the final sale scheduled for 2030. At the same time, the county will launch a pilot program allowing it to withhold up to 100 delinquent tax certificates at each of those sales. Only owner-occupied homes that qualify for a homeowner exemption and have among the lowest outstanding tax debts are eligible.
Those homeowners will instead be enrolled in a payment plan that allows them to repay their delinquent taxes over a three-year redemption period. Under the current system, property owners have two and a half years to pay off their debt, and no structured payment plan is available.
“This bill provides reform that works for property owners, taxing districts and taxpayers,” said Cook County Treasurer Maria Pappas. “Temporary financial hardship shouldn’t result in families losing generational wealth and being left broke.”
The legislation also creates a surplus equity fund for homeowners whose properties are at risk of foreclosure after their tax debt has been sold at recent tax sales. In cases where a tax buyer seeks to obtain the deed, property owners will be able to file a claim to recover any equity lost in the process. The fund will be financed through additional fees paid by tax buyers.
Currently, counties can place tax liens on properties with at least one year of unpaid taxes and sell those liens at annual tax sales. During the redemption period, homeowners must repay the original debt plus interest and fees set by the tax buyer. While an estimated 90% to 95% of homeowners redeem their properties in time, those who do not can lose their homes entirely—and any equity they have built—once a tax buyer secures the deed through the courts.
The new system changes that process. After the transition period, tax certificates will still be sold, but if a buyer or other party seeks to take ownership of a property, the home must be sold at auction. The opening bid will be set at the amount of unpaid taxes. If the winning bid exceeds that amount, the surplus proceeds will go to the original homeowner. Property owners will also be allowed to participate in the auction.
For properties where tax certificates go unsold, the county will offer homeowners the option to enter into a payment plan.
The legislation has drawn mixed reactions. Opponents argue that auctioning properties may still prevent homeowners from realizing the full market value of their homes. Supporters counter that owners retain the option to sell their properties during the redemption period, pay off their tax debt and keep any remaining equity.
The Illinois Tax Purchasers Association has opposed the bill, raising concerns about how it will affect investor returns, though the group did not respond to requests for comment. Lawmakers noted the changes could significantly reduce the profitability of tax lien purchases.
Cook County Board President Toni Preckwinkle called the legislation a step toward a more equitable system, saying it “sunsets the practice of private tax buying in Cook County and replaces it with a more equitable process that better protects property owners.”
The reforms also come amid ongoing legal pressure. Cook County was recently found liable in a federal class-action lawsuit involving roughly 2,500 property owners who did not receive surplus equity after losing their homes. John Bouman, the plaintiffs’ attorney, said the central issue is the loss of equity rather than the tax sale system itself.
“If the legislation is successful in eliminating the source of the constitutional violation,” Bouman said, “then there won’t be any more people entering into our class who need to get their money back.”
Supporters say the new law is designed to resolve those constitutional concerns while giving struggling homeowners a clearer path to keep their homes or recover their equity.
School Cellphone Ban Passes
Governor Pritzker secured another long-sought win after earlier victories on artificial intelligence and insurance regulation: a statewide ban on cellphones in schools.
First proposed in early 2025, the measure previously failed to clear both chambers. With its passage this year, Illinois joins a growing number of states moving to limit cellphone use in classrooms. Pritzker is expected to sign the bill into law.
“Every parent and educator knows the damage that unchecked screen time and social media can do to our children and how disruptive they can be in school,” Pritzker said in a statement. “The bipartisan support for this effort reflects the urgency educators and families across Illinois feel.”
Pension Buyout Program Extended
Lawmakers in Springfield have approved a two-year extension of Illinois’ pension buyout program, preserving a tool that offers flexibility for retirees while generating savings for the state.
The program allows retiring government workers to take a lump-sum payment equal to a portion of the net present value of their pension—the amount needed today to fund their lifetime benefits. Participants who choose the buyout receive roughly 60% to 70% of the pension’s face value and can roll those funds into an IRA or 401(k)-style account, giving them greater control over their retirement savings.
Because participants accept less than the full value of their pension, the program reduces long-term liabilities for taxpayers.
First enacted in 2018 after being championed by former state representative and current Illinois Policy Institute senior fellow Mark Batinick, the buyout option has already been extended twice. More than 15,000 retirees across Illinois’ five state pension systems have participated to date.
The program has reduced the state’s pension liabilities by an estimated $2.6 billion to $2.9 billion. Governor Pritzker’s office estimates extending the program through fiscal year 2028 could generate an additional $1.4 billion in savings.
For retirees, the buyout provides access to a larger upfront sum that can be used for major expenses such as housing or medical care. It also offers estate planning advantages, as funds held in a self-directed account can be passed on to heirs—unlike traditional pensions. Some participants may also opt in due to concerns about the long-term stability of pension systems.
The extension measure, House Bill 5196, was introduced by Rep. Bob Morgan and has passed both chambers of the General Assembly. It now awaits the governor’s signature and is expected to be signed, as it aligns with his broader pension funding plan.
Supporters say pension buyouts should remain part of a broader strategy to address Illinois’ ongoing pension challenges. With a growing number of employees in the State Universities Retirement System choosing 401(k)-style plans over traditional pensions, some argue the state’s other retirement systems should offer similar options.
Others contend that maintaining the defined-benefit system may ultimately require a constitutional amendment to allow modest benefit adjustments, aimed at improving long-term sustainability while protecting retirement security.
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct