Pritzker’s magic beans: Growing a record-setting $55B Illinois budget

Illinois Gov. J.B. Pritzker invoked a fairy tale about magic beans and a giant during his annual state of the state and budget address. Too bad he forgot to take an ax to the giant, record-setting budget he has grown by $16.7 billion since taking office.

Gov. J.B. Pritzker used his annual State of the State address Feb. 19 to deride those who dare disagree with his policies as “professional bellyachers” pushing “magic bean fixes” to the state’s problems.

Lost on him was the irony that his fiscal year 2026 budget proposal set another spending record at $55.2 billion that depends on its own set of magic beans, as have his past record-setting budgets.

Magic-bean budgeting

The most consequential information presented by Pritzker was within his proposed FY 2026 budget, which did not receive enough attention during his State of the State remarks. Pritzker’s proposed budget increases state spending to an all-time high of $55.2 billion – an increase of $2 billion from last years’ $53.2 billion spending plan.

If enacted, the state’s annual budget will have ballooned by $16.7 billion compared to 2019 levels.

Prior to the address, the Governor’s Office of Management and Budget was projecting a $3 billion budget deficit as recently as last November. These projections estimated upcoming FY 2026 revenues would slightly decrease compared to 2025 levels, as Illinois’ economy was expected to slow compared to recent trends. The most recent Commission on Government Forecasting and Accountability – a body of the state legislature that tracks revenues – was also reporting mixed revenue performance that seemed to confirm these projections. As of January, General Funds revenues had come in flat on a year-to-date basis when comparing FY 2024 and FY 2025 total resources.

However, Pritzker’s proposed budget is now relying on upward revisions in expected revenues to fund most of his proposed spending increases. The budget proposal now claims the state is expecting revenues to increase by more than $1.5 billion compared to current year revenues. That’s a large increase compared to the revenue reports from earlier this year and projections the Governor’s Office of Management and Budget made just three months ago. If these revenue projections do not materialize, taxpayers may be on the hook for future tax increases that the governor promised to avoid, cuts to state spending or some combination of the two.

The newfound revenue projections weren’t enough to balance the budget entirely, though. An additional $469 million worth of “revenue adjustments” were included in Pritzker’s budget proposal. These adjustments include an expected $198 million in revenue from a Delinquent Tax Payment Incentive Program, shorting transfers to the state’ Road Fund by $171 million, and an additional $100 million in tax revenue from casinos thanks to the “realignment” of taxes on table and electronic games.

Further muddying Pritzker’s claims of a balanced budget are the state’s pension obligations. While the state is planning on making their statutorily required contributions to the five state-run pension funds, these contributions remain insufficient on an actuarial basis. The state’s statutory requirements dictate the state spend $11.72 billion on pensions in the coming fiscal year. However, the plans’ own actuaries say the state needs to be spending $16.82 billion to fully fund the pension systems – a difference of $5.1 billion.

In other words, while the state permits pensions to be underfunded by design, Pritzker’s budget will be more than $5 billion out of balance because it fails to make a full, actuarially determined pension payment. Pritzker has never approved a budget that makes the full payment.

Even worse, Pritzker’s budget plans on state lawmakers enacting benefit increases to the Tier 2 pension system for state workers hired after 2010. These increases would grow the state’s current $144 billion unfunded pension liability and require additional funds from the state. His proposed “Tier 2 Social Security Wage Base Adjustments” are projected to cost the state an additional $78 million in 2026, according to his budget. While lawmakers are currently considering the need for benefit changes to Tier 2 pensions, no actuarial testing has proven that any members of Tier 2 pensions are in violation of Social Security Administration requirements that would require these changes to be made.

Minimizing the Illinois experience

Much of Pritzker’s State of the State address was spent touting his accomplishments as governor. Many of his claims ignored valuable context to put into perspective how dire the state of the state truly is.

First, the governor cited improvements in the state pension systems’ funded ratios. What he neglected to mention is that, in addition to shorting pensions by $5.1 billion, the pension systems only have 46 cents on hand for every dollar of promised benefits. The pensions funded ratios are lower today than they were in 2021. Experts warn pensions with funding ratios below 60% are deeply troubled and plans with funding ratios below 40% are likely to be past the point of no return. Illinois is getting there.

Additionally, reference was made to the state’s “nine credit ratings upgrades” experienced in recent years. While the state’s credit rating has improved recently – in large part thanks to $35 billion in federal pandemic aid and unexpected revenues for the state – Illinois’ credit rating is the lowest of any state.

Pritzker also touted how last year’s budget included a provision that eliminated Illinois’ statewide tax on groceries. What he didn’t say is the repeal was also part of a compromise struck with local taxing authorities. All local governments will be able to implement their own grocery taxes without holding a referendum – 46 already have done so. Non-home rule units will also be given the ability to increase sales taxes by up to 1 percent without resorting to referendums. In other words, while the statewide grocery tax was eliminated, new local taxes may soon take its place, leaving some Illinoisans without any relief and without a say about the tax. Illinois’ combined state and local tax rates are already the highest in the Midwest and the 7th highest in the nation.

Lastly, Pritzker claimed his administration has made Illinois a hotbed for employers. The data doesn’t bear him out. Since January 2020, Illinois’ private sector has added only 500 jobs. The government sector has grown by 14,900 jobs. That’s nearly 30 government jobs for every private sector job added. As a result, Illinois’ unemployment rate is the third-highest in the nation and remains higher than when Pritzker took office in 2019.

Fortunately for Illinoisans, there is an alternative to Pritzker’s budget approach. The Illinois Policy Institute has proposed an alternative budget plan that would bring long-term financial stability to the state and foster an environment in which families and businesses can thrive – with no magic beans needed.