Illinois

Illinois is leaving money on the table with structurally unsound tax policy

Published

1 year ago

June 18, 2025

Illinois is leaving money on the table with structurally unsound tax policy

The Illinois General Assembly just enacted a $55.2 billion General Fund budget for the upcoming 2026 fiscal year. A sizable chunk of that budget, $16 billion, covers mandatory spending obligations Illinois is required to pay either by law, such as debt service owed to bond holders, or contract, like health insurance for state workers. That leaves around $39 billion for services, over 94% of which goes to education, health care, social services and public safety, the core services families rely on across Illinois.

Most of the commentary since the budget passed has highlighted one of three things: what the incremental increases were for various items, like the state’s school-funding formula, which got $307 million instead of the $350 million originally proposed; what got cut, like $330 million in health care for noncitizens between the ages of 42 and 64; or what didn’t get addressed at all, like the $771 million fiscal cliff facing the Regional Transportation Authority. Certainly, this short-term stuff matters. That said, it doesn’t paint a complete picture of state finances.

For instance, while the $307 million bump for K-12 is welcome, the shortfall in what the evidence shows every school needs to provide an adequate education to all students will grow from $2.6 billion this year to $2.7 billion next year. Meanwhile, fiscal year 2026 appropriations for higher education will be around $2 billion, or 42% less, in real, inflation-adjusted dollars than they were 26 years ago. In fact, while year-over-year spending will increase slightly, total FY 2026 General Fund appropriations for the four core services are 12% less in real, inflation-adjusted terms than they were back in FY 2000.

Despite cutting real spending on services for decades, the state still couldn’t balance its FY 2026 budget without bumping a number of taxes and fees by $482 million, sweeping some $237 million from other state funds, not making a $171 million scheduled transfer to the Road Fund, and creating a tax amnesty program to raise a quick $228 million.

So why does Illinois, which has an economy of over $1 trillion, the fifth largest of any state, have to manufacture a combined $1.1 billion in revenue to balance its budget, even though real spending on services will be less next year than at the start of this century?

No short-term budgetary analysis will explain that. However, a review of the long-term data does. And that data shows the Illinois General Fund has a structural deficit. A structural deficit exists when over time, tax revenue growth doesn’t support the inflationary cost of maintaining the same level of public services from year to year. The long-term data also shows that flawed tax policy caused this structural deficit, and those policy flaws are clear: Neither of Illinois’ two primary revenue sources — the income and sales taxes — are designed to respond to the modern economy. This has created a tax system that’s both unsound and unfair.

Start with the Illinois sales tax, which applies primarily to purchase of goods, not services. That’s a losing proposition, given that the sale of goods accounts for just 17% of state gross domestic product, while the sale of services accounts for 74%. Failing to levy sales taxes on most of the largest and fastest-growing segment of the economy means the revenue it generates can’t grow with the economy. Fixing that requires assessing the Illinois sales tax to the purchase of all consumer services, like neighboring Iowa and Wisconsin do. That reform would generate over $2 billion in new revenue.

Then there’s the income tax, which is supposed to create some tax fairness and respond to how income growth is actually shared among taxpayers over time. Since 1979, the real incomes of the bottom 10% of earners has declined. Folks in the middle realized a modest 8% growth in income, while the wealthiest 10% saw their incomes jump by 30%. So to respond to reality and tax people fairly, the income tax should vary with ability to pay, by imposing higher tax rates on higher levels of income and lower rates on lower levels of income.

Except the Illinois income tax can’t, because the state Constitution requires utilization of only one, flat rate. To fix this, the state’s flat income tax rate should be increased by 1.5 percentage points, to 6.45%. That’s enough to generate about $4.4 billion in net new revenue, after covering the cost of implementing a new, refundable tax credit to offset the impact of the aforesaid tax increases on low- and middle-income families. Collectively, these reforms would eliminate the structural deficit, while simultaneously making state tax policy fairer for people.

Bottom line: Getting Illinois’ fiscal house in order is the only way to fund core services sustainably over time, and getting there requires aligning Illinois tax policy with today’s economy.

Ralph Martire is executive director of the Center for Tax and Budget Accountability, a nonpartisan fiscal policy think tank, and the Arthur Rubloff professor of Public Policy at Roosevelt University.

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Illinois

New Illinois bill aims to overhaul public defense system | The Chicago Report

Published

2 hours ago

June 27, 2026

Press Room

New Illinois bill aims to overhaul public defense system | The Chicago Report

A major overhaul to the Illinois justice system could be officially underway.
House Bill 3363 lays the foundation for a brand new agency, the state public defender office.
The goal is to bring more consistent legal representation for Illinois residents who can’t afford an attorney.
Joining us now to discuss the rolled-out timeline is the bill’s sponsor, State representative Dave Vella, who actually started his legal career as a public defender, before heading to Springfield.

Posted June 26, 2026 7:06pm CDT

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Illinois

Illinois Democrats face backlash after blaming Trump in Chicago cross-burning case | Fox News Video

Published

12 hours ago

June 26, 2026

Press Room

Illinois Democrats face backlash after blaming Trump in Chicago cross-burning case | Fox News Video

‘Outnumbered’ reacts to Illinois Gov. JB Pritzker and Chicago Mayor Brandon Johnson blaming President Donald Trump for a cross-burning incident in Grant Park.

Illinois Democratic leaders Governor JB Pritzker and Chicago Mayor Brandon Johnson are slammed for weaponizing a Chicago cross burning incident by blaming former President Trump. Despite the suspect, Murlin Lue, admitting his motive was to protest Trump, not racism, Pritzker and Johnson doubled down. Critics, including Illinois GOP State Rep. Chris Miller, accuse them of playing politics and fostering division rather than seeking truth.

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Illinois

Illinois Lt. Gov. candidates focus on affordability in pitch to Rockford voters

Published

22 hours ago

June 26, 2026

Press Room

Illinois Lt. Gov. candidates focus on affordability in pitch to Rockford voters

ROCKFORD, Ill. (WIFR) – November ballots will feature a repeat of top billing in the race for governor. Illinoisans can once again choose between Governor JB Pritzker or Darren Bailey to lead the Land of Lincoln.

But beside their spots, new names will appear for voters.

The Democratic and Republican candidates for governor picked new running mates for their rematch. With Lieutenant Governor Julianna Stratton running for U.S. Senate, Pritzker picked Christian Mitchell to join his ticket. On the Republican side, Aaron Del Mar joins Bailey, who previously ran with Stephanie Trussell in 2022.

Mitchell and Del Mar spoke Thursday with WIFR on what inspires them to run, their campaign priorities and ideas to improve the Rockford region.

Backgrounds

Starting with the Democratic ticket, Mitchell joins the race as a former state representative from Chicago as well as a deputy governor with the Pritzker administration.

“Before anything else, I’m Debbie’s son, and I’m James’s grandson,” Mitchell introduced. “They’re the ones who really instilled in me the value of hard work and made sure that I was going to have a very bright future.”

Mitchell sees the role of lieutenant governor as a partner to the state’s executive.

“I’m really lucky to be running with somebody who I respect, and who I think is the best governor in the nation… Governor JB Pritzker,” he said.. “My first thing is going to be supporting his agenda, which right now is all about lowering costs and raising wages.”

On the Republican side, Del Mar hails from suburban Chicago and considers his first priority to be raising his family.

“I wanted nothing to do with politics, did not want to be involved — wanted just to raise my kids and work my job,“ said Del Mar. He described his start in public service as something he ”kind of got pulled into.”

The Republican worked his way from a city council member in Palatine, at 29-years-old, to co-chair of the Illinois GOP. Although he says he “wanted nothing to do with being on” Bailey’s campaign, Del Mar sees strength in unity — offering a Chicago area perspective alongside Bailey’s southern Illinois roots.

“How about everybody in the state of Illinois, regardless of where you come from, has a seat at the table. If you’re from a southeast farming community, or you’re from the city of Chicago, where I grew up, everybody has a stake in the game.”

Priorities

Mitchell points to economic development as his focus for the gubernatorial campaign.

“I see vacancies on State Street in Chicago. I see vacancies on Main Street in Belleville and Alton and in Carbondale,” he recounted. “I want to make sure that we’ve got the kind of amenities and economic development, that kind of affordability, that allow us to make sure that folks want to stay in the towns that they’re born in if they want to.”

The Democratic candidate also eyes long-term planning for the state, including an “Illinois 2050 Plan.”

“How do we have the kind of educational undergirding that means that no matter where you’re from, you have a chance to have one of those jobs, whether it’s in new agriculture technology and new farming techniques or biotech, quantum.”

When asked how to achieve these priorities, Mitchell turned to investing in public education, retaining residents with better wages and improving health care.

“Making sure that we are able to protect our health care system, so that folks aren’t going broke when they get sick, that’s another big way that we can make an impact.”

Del Mar outlined a cost-of-living focus as central to his campaign.

“You wanna succeed, you do the basics really well, and the basics are affordability,” he contended.

The Republican repeatedly highlighted the state’s property taxes — reportedly the highest in the nation — as an issue to tackle. He suggested redirecting Illinois’s budget as one measure to ease the burden on homeowners.

“Number one is fully funding the state’s portion of local taxes, because that will offer people property tax relief.” Del Mar clarified this wouldn’t mean redirecting funds for public education.

“We’re looking at how we fund schools, how we make sure to empower teachers to have the best educational outcomes that we can have here in Illinois, regardless of what your zip code is, regardless of what your parents do for a living or how much money they make,” added Del Mar.

Reflecting on Rockford

Each candidate provided their vision for boosting the Rockford region.

For Mitchell, improvements continue with infrastructure funding, building on the state’s roughly $500 million investment in the area.

“The things that we have already worked on, through the capital plan that I helped lead as deputy governor, that the governor signed and is implementing, are already having benefits that the people of Rockford can see.”

The Democrat also pointed to the Chicago Rockford International Airport as an opportunity.

“Investing in that regional airport where we’ve already helped with a matching grant to get additional funds, that helps build out the economy,” said Mitchell. “There’s so much that’s happening there that it is really good for the economy and bringing more people back to Rockford.”

Del Mar shared his local priority as supporting unionization in the area.

“Union families deserve to be able to have a livable wage, and that’s something that’s important to Darren and I,” said Del Mar. He mentioned pensions were another item that a Republican executive wouldn’t touch for the public and private sector unions.

“I know that area up there has strong union backbone,” described Del Mar. “We want to make sure they know that they’re not going to have a bigger supporter in the governor’s mansion than Darren and I.”