Illinois budget talks enter final week amid fears of congressional cuts

Yahoo

26-05-2025

Illinois lawmakers have one week to pass a new state budget with little room for new spending and Congress presenting further challenges and uncertainty.
Revenue projections had already been declining as the spring session has progressed. Now, lawmakers who have long feared further federal cuts, are grappling with the U.S House's passage of a spending plan that Illinois' Senate president warns would be 'catastrophic for working families' – as well as state finances.
'There's no state in the union that could survive the sorts of cuts they're proposing to health care for working families,' Senate President Don Harmon, D-Oak Park, told Capitol News Illinois about the bill that still needs U.S. Senate approval.
The General Assembly has through May 31 to pass a budget with a simple majority vote before the threshold increases to a three-fifths vote on June 1. House Democrats approved a portion of last year's budget with the minimum number of votes required to pass a bill after several Democrats dissented over spending concerns.
The state's fiscal picture is even more challenging this year. The Governor's Office of Management and Budget lowered revenue projections earlier this month for fiscal year 2026, which begins July 1, by $536 million from its February estimate, to $54.9 billion in revenue.
Harmon told host Jak Tichenor on the latest episode of 'Illinois Lawmakers' that Senate Democrats have been told not to expect spending for new programs this year.
'This is a tougher year than we've seen in recent years; certainly the toughest since I've been Senate president,' Harmon said. 'We have some newer members who've never had to put together a budget like this one, so we tried to make sure people tempered their expectations.'
Gov. JB Pritzker's introduced spending plan, which was proposed in February before the latest revenue projection cuts, called for a 3% increase in state spending in a budget totaling $55.2 billion. But outside of education, health care and pensions, spending was only projected to grow by 1%.
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The revenue projection cut means lawmakers likely have even less room for spending increases than what Pritzker requested in February.
'The biggest thing that I've said to the caucus pretty consistently since day one is that no one's going to get everything they want, that we have to have reasonable expectations, that we have to balance the budget,' House Speaker Chris Welch, D-Hillside, told Capitol News Illinois last week. 'We're going to spend what we bring in, no more.'
The challenge of balancing the budget was complicated even further Thursday when, in the early morning hours, the U.S. House passed legislation to enact much of President Donald Trump's domestic agenda, which includes slashing federal spending on Medicaid, education and clean energy programs.
'The Trump administration and his policies are throwing a lot of uncertainty and making it a lot harder for us to determine how we're going to pay for the programs and services that our families rely on in Illinois,' state Rep. Anna Moeller, D-Elgin, who chairs a legislative working group that focuses on Medicaid policy, said during an interview.
Medicaid, the health care program for low-income individuals that is jointly funded with state and federal dollars, is one of the largest categories of state government spending. The program is jointly funded with state and federal funds and provides health care coverage to more than 3.4 million people in Illinois, or about a fourth of the state's population.
In fiscal year 2024, according to the Department of Healthcare and Family Services, the state received approximately $20 billion in federal matching funds for Medicaid. That represented about 62% of the program's total cost.
But the legislation that passed the U.S. House Thursday morning would make substantial changes to the program that would both reduce the number of people covered by Medicaid and the amount of federal matching funds the state receives.
One of the most significant provisions that would affect Illinois, according to a summary by the nonprofit health policy research organization KFF, would reduce the federal match rate paid for people enrolled through the Affordable Care Act expansion group by 10 percentage points.
Under that 2010 health insurance reform law, also known as 'Obamacare,' states were allowed to expand eligibility for Medicaid to include working-age adults, including those without dependents, with incomes up to 138% of the federal poverty level.
In Illinois, more than 772,000 people are enrolled in Medicaid under that program and the federal government pays 90% of the cost of their care, according to IDHFS. But the House legislation would drop that matching rate to 80% for Illinois and other states that also provide health coverage or financial assistance to people who are not lawfully present in the United States.
IDHFS has estimated that provision would cost Illinois approximately $815 million in federal matching funds per year because the state currently operates two such programs – one for adults ages 42-64, and another for seniors over age 65 – although Pritzker has proposed eliminating the one for adults under age 65.
Under current state law, however, coverage under the ACA expansion program automatically ends if the federal government ever lowers its reimbursement rate below 90%.
Other provisions of the congressional bill would require states to impose work requirements on enrollees in the ACA expansion group and require those individuals to verify their eligibility for the program at least twice per year.
'We don't have the resources to backfill that,' Moeller said. 'It would be beyond the scope of our budget right now to be able to do that.'
The total impact the proposed legislation would have on Illinois remains unclear, and the bill still must be considered by the U.S. Senate, which could make changes of its own.
Illinois would also have to spend more on the Supplemental Nutrition Assistance Program, or SNAP, beginning in 2028. The bill would require states to pay for 5% of benefits and 75% of administrative costs, rather than 50% of administrative costs and nothing for benefits.
Other parts of the plan would slash federal tax incentives for clean energy and nuclear projects by the end of 2028, potentially forcing the state to pay more to reach its goal of carbon-free electricity by 2045.
It's possible lawmakers will return to Springfield later this year to update the FY26 budget based on changes at the federal level.
'This president can send out a tweet that changes the world, and we may have to come back,' Welch said. 'And so, we've been preparing the caucus that that's a possibility: know that something could happen based on the federal budget that brings us back.'
SPAIN-MCCOMBIE-HAMMOND PHOTO
But Rep. Ryan Spain, R-Peoria, said there might not be any reason to have a special session to adjust the budget later this year after reviewing what the U.S. House passed.
'I think that's pretty silly, considering nothing will be effective immediately. We'll have a lot of time to adjust,' Spain said.
Other legislative reforms being considered this spring also come with budget implications, and many may be off the table for now, according to Harmon.
Lawmakers are continuing to work toward a funding solution to cover a $771 million funding gap for Chicago-area public transportation agencies in 2026. Despite being close to agreements on reforms for the agencies, funding remains undecided.
Harmon suggested that people using the roadways rather than public transit could be a key funding source, while Rep. Eva-Dina Delgado, D-Chicago, who leads public transit talks in the House, said lawmakers are continuing to look at all options to close the gap.
Pension reform has also been discussed to improve benefits for public employees who entered the system since 2011 and fix compliance with Social Security law.
'All of the solutions, however, require more money, and this is a year when we just don't have much more money,' Harmon said. 'So I expect some of those conversations to continue into the summer.'
The same is true for changing how colleges and universities are funded. Lawmakers have held hearings on a plan that would prioritize funding to universities not receiving an adequate level of funding based on a mathematical formula.
'I don't see the requisite amount of money being driven into higher education funding formulas to achieve the outcome this year,' Harmon said.
Pritzker has said he will not look at major tax hikes to balance the budget and asked lawmakers in February to come up with corresponding cuts for any new spending they want. He also proposed about $400 million in tax changes to balance the budget.
But as progressive groups rallied in the capitol Thursday in favor of $6 billion of tax increases they want lawmakers to consider, Republicans feared Democrats will be tempted to tap into taxpayers to fund larger spending increases. House Democrats reviewed possible tax increases in a closed-door meeting Thursday afternoon.
'The legislature has a great track record of using this time, squandering time for many months, and using the waning hours of the legislative session to enact gigantic changes that have real world consequences for taxpayers,' Spain told reporters.
Republicans hope Pritzker exercises caution.
'I know the governor in our first conversations before the budget address, when we sat down together, he wasn't celebrating,' House Minority Leader Tony McCombie, R-Savanna, told reporters. 'He knew that this was going to be a tough year, and it's going to continue to get tough as we go forward.'
The budget is typically unveiled publicly a day or two before lawmakers leave Springfield for the year, meaning more details about spending and tax plans won't be available likely until at least Thursday.
'Less than 10 days out, it's exactly where you'd expect to be: more questions than answers,' Sen. Chapin Rose, R-Mahomet, told Capitol News Illinois.