South West Illinois News

The Governor’s Office of Management and Budget (GOMB) has released a projection indicating that Illinois faces a budget deficit of $3.2 billion for Fiscal Year 2026. This forecast is part of the annual "Illinois Economic and Fiscal Policy Report," which includes predictions on state revenues and expenditures for the fiscal year beginning July 1, 2025. The Illinois General Assembly will need to address this issue when voting on the FY26 budget in spring 2025.

The GOMB's analysis took into account current revenue trends reported by the Illinois Department of Revenue (IDOR) to the Commission on Government Forecasting and Accountability (CGFA). Additionally, economic projections from S&P Global were utilized, considering global changes in interest rates, labor market growth, and GDP growth. These indicators suggest stagnant state tax revenues due to flat employment numbers and consumer spending patterns, leading to minimal growth in income and sales tax payments.

In contrast, state spending commitments continue to rise due to contracts with organized labor and obligations to key interest groups like pension beneficiaries and school districts. As a result, GOMB anticipates that expenditures will significantly increase in FY26, contributing to the projected budget imbalance.

This $3.2 billion deficit does not include potential additional spending from new or expanded programs initiated by either the General Assembly or the Governor.

Rep. Friess commented on these findings: “The shocking numbers reported by GOMB in their FY26 budget projection show the results of the irresponsible budget passed by the majority party,” he said. “Illinois cannot continue this downward financial spiral. We must turn this ship around and work toward a budget that is sustainable and supports a healthy future for Illinois.”

Further complicating matters are declines in state income tax receipts observed in October 2024 compared to October 2023. Personal income tax receipts decreased by $5 million, while corporate income tax receipts fell by $94 million during this period. Over four months from July 1 to October 31, corporate income tax collections dropped by $255 million.

These declines may be linked to rising unemployment rates in Illinois since most income taxes come from employee paycheck withholdings. When fewer individuals are employed, income tax collections decrease accordingly. Sales tax receipts also saw a decline over this four-month period but remained steady in October 2024.