Pritzker signs nearly $56B budget with new business taxes as he seeks 3rd term – Capitol News Illinois

Gov. JB Pritzker signed the eighth budget of his tenure on Tuesday as he and Illinois Democrats gear up for an election-year battle centered around affordability — though he had to issue a clean-up veto aimed at addressing late-night drafting errors.

The fiscal year 2027 spending and corresponding revenue plans that will take effect on July 1 total $55.9 billion, which is slightly less than what Pritzker initially proposed in February. Though that’s about $900 million more than what lawmakers initially approved for fiscal year 2026, discretionary spending will be largely flat year-over-year after lawmakers approved supplemental spending for the current year.

The FY27 budget raises hundreds of millions in new taxes, however, focusing on businesses, social media, fantasy sports and digital assets.

Despite calls from progressive lawmakers to more aggressively increase taxes on businesses and the ultra-wealthy, which largely did not materialize, the budget passed with relative ease in both chambers around 4 a.m. on June 1 with all Republicans voting against it and just a few dissenting Democrats.

“In a year marked by economic uncertainty, rising costs and unprecedented fiscal challenges created by Donald Trump and the MAGA Congress, Illinois has once again demonstrated that responsible governing and balanced budgets go hand in hand with making life more affordable for working families and investing in the future,” Pritzker said.

Read more: Session slog ends in $56B budget, new taxes on social media companies, crypto, fantasy sports

Though the budget contains fewer bells and whistles than might have been expected in an election-year plan designed to attract voters, Pritzker said Democrats’ spending priorities stand in sharp contrast to Republican initiatives at the federal level.

“In Washington, they continue to run massive deficits and pile debt onto future generations to fund tax breaks for corporations, brutal ICE occupations, vanity projects like a new White House ballroom, painting the reflecting pool blue — which already is an epic fail — and holding UFC matches on the White House lawn,” Pritzker said.

Illinois lawmakers included some tax breaks in the budget. It pushes the 1.3-cent gas tax increase that was scheduled for July 1 back until after the election to Jan. 1. It also reduces the sales tax on school supplies from 6.25% to 1.25% between Aug. 7-16.

Lt. Gov. Juliana Stratton, who is running her own race for U.S. Senate, compared those breaks to Trump’s comment last week that he “loves the inflation.” She said Illinois’ budget should be a “model” for other states.

Raoul is not happy with the funding he got as his office struggles to keep up with high caseloads.

“We were shorted about $10 million from what our overall appropriation was for fiscal year 26 and I can’t imagine why,” Raoul said on June 9 at a City Club of Chicago event, adding “all iterations of it all the way until 3 a.m. in the morning had us fully funded.”

Pritzker said he expects money the attorney general will receive from winning settlements to make up the difference and Raoul “deserves as much support as we can provide him.”

Local governments are getting more funding than expected after Pritzker’s initial proposal, however. Lawmakers allowed the percentage of the income tax that they receive to stay flat at 6.47% after Pritzker proposed reducing it. Because of natural income tax growth, the total dollar amount received will grow.

Illinois lawmakers are also in line for a roughly 3% pay raise, which will bring their base salaries to $101,450. State law ties their pay each year to the rate of inflation.

Lawmakers also appropriated $143 million to the healthcare program for undocumented immigrant seniors and $4 million for welcoming centers that provide services to immigrants arriving in Illinois.

Direct service providers will receive a 60-cent wage increase, which is half of what is recommended. The state’s “rainy day” fund will grow by an estimated $197 million in other state funds, though lawmakers didn’t direct any new general funds toward it.

It also fully funds pensions and extends a buyout program for two years aimed at reducing unfunded liabilities. When the state’s income tax refund fund carries a surplus of $150 million or more, money over that amount will be directed to pensions.

Senate Republican Leader John Curran, R-Downers Grove, was still displeased with the larger spending plan, which is the largest in state history despite its minimal growth.

fully funds the annual Evidence-Based Funding increase for K-12 schools, including restoring $47 million for property tax relief grants that were not included in FY26.

School districts must agree to reduce their tax levy for three years to receive the grants, however.

Funding for free breakfast and lunch programs at public schools also tripled to $26 million.

“When Washington threatens food assistance for families, Illinois is investing in children and making sure more students can get a healthy meal at school,” Welch said.

The budget appropriates $10.8 billion to the State Board of Education, which is about $120 million more than Pritzker requested, but less than the agency hoped for.

Some funds are also shifting out of ISBE this year to the new Department of Early Childhood, which will become active on July 1.

Other education spending includes:

• $748 million for the Early Childhood Block Grant, which continues funding for Pritzker’s Smart Start preschool initiative.
• $15 million for the Teacher Vacancy Grant pilot program.
• $721.6 million for the Monetary Award Program, or MAP – an amount equal to FY26.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.