The Governor’s Office of Management and Budget (GOMB) this month issued a projection of Illinois’ budget forecast for Fiscal Year 2026. The budget projection, contained within its annual “Illinois Economic and Fiscal Policy Report,” includes forecasts of State revenues and expenditures for the approaching fiscal year, which will start on July 1, 2025. The newly elected Illinois General Assembly will have to vote on the FY26 budget in spring 2025.
The GOMB forecast, which included an analysis of current State revenue and expenditure trends, took account of the stagnant current revenue trend numbers reported by the Illinois Department of Revenue (IDOR) to the Commission on Government Forecasting and Accountability (CGFA). In addition, GOMB utilized economic forecast projections generated by economic forecaster S&P Global. These projections utilize worldwide data on changes in interest rates, labor market growth, and overall GDP growth, and their effects on the Illinois economy. These trend lines indicate continued stagnation in State tax revenues moving forward, as flat-lined Illinois employment numbers and consumer spending patterns are expected to lead to near-zero growth in Illinois income tax and sales tax payments to IDOR.
By contrast, “locked-in” State spending numbers continue to soar. The State is already committed, through contracts with organized labor and promises made to key interest groups (such as recipients of vested pension benefits, and school districts), to generating a massive increase in expenditures in FY26. Based on this pattern of stagnant (or worse) revenues and soaring spending, GOMB issued a preliminary projection that the FY26 budget will be $3.2 billion out of balance.
The projected $3.2 billion deficit is separate and independent from any additional spending pressures that could be generated by new or expanded programs initiated by the General Assembly or by the Governor.