‘No magic beans’: The structural flaw that still afflicts Illinois’ budget

Last week, Gov. Pritzker delivered a unique state budget address. Sure, he included topics conventionally covered in such speeches — like revenue projections and an outline of some spending priorities for the upcoming year. But then he veered into the atypical. After applauding the conviction of former Illinois House Speaker Michael Madigan on 10 charges of corruption, he decried Trump Administration actions taken in the name of cost cutting under the direction of Trump’s fellow billionaire crony Elon Musk.

Pritzker averred only an “idiot” would think it’s a good idea to “indiscriminately slash” funding for things like “education and health care for disabled children, gang crime investigations, clean air and water programs, monitoring of nursing home abuse, nuclear reactor regulation, and cancer research” as well as “support for farmers and veterans’ services,” under the guise of eliminating inefficiencies. But Pritzker didn’t stop there, not by a long shot.

Noting he wouldn’t “invoke the specter of Nazis lightly,” Pritzker bared his concern that the Trump Administration is following the same “authoritarian playbook” of pointing “to a group of people who don’t look like you” to blame them for societal problems, that Nazis used when they subverted the Weimar Republic. Given his lifelong dedication to building a Holocaust museum to ensure the world never forgets the horrors Nazi Germany inflicted on millions of innocent Jews, this had to be difficult for Pritzker.

It also garnered a ton of media attention. So much so that some of the far more mundane fiscal messages Pritzker conveyed got somewhat lost. For instance, as is typical for any governor, Pritzker touted various fiscal policy accomplishments attained during his administration. Unlike many other governors, however, the data back up his claims.

For instance, Pritzker paid off $12 billion in debt, prepaid $700 million of unfunded pension liabilities, built the state’s rainy day fund — which was zeroed out under his predecessor Gov. Rauner — up to $2.2 billion, and generated roughly $1.5 billion in recurring revenue for state coffers by taking various actions, like eliminating ineffective corporate tax expenditures and increasing tax rates that apply to the sportsbooks and casinos.

Yet despite this track record, the governor underscored Illinois’ General Fund faces some real fiscal challenges in FY 2026. That’s not good, given it's the state’s primary operating budget, with 95% of all General Fund service expenditures going to cover education, health care, human services, and public safety.

The governor blamed FY 2026 fiscal shortcomings on a slower rate of revenue growth than what was realized during the past several years, which is true, but an incomplete explanation. After all, in addition to raising the aforesaid $1.5 billion in new revenue, Illinois also received some $6.4 billion in one-time federal pandemic relief over the last few fiscal years. Without either of those financial bumps available in FY 2026, of course new revenue growth didn’t reach recent levels.

The real issue is that revenue growth didn’t even keep pace with inflation. That’s because Illinois’ General Fund has been plagued by a structural deficit for generations. A “structural deficit” exists whenever a tax system fails to generate enough revenue growth over time to cover debt payments, as well as the inflationary cost of maintaining delivery of the same level of public services.

To be clear, all the data show flawed tax policy — not overspending on services — is the driver of the structural deficit. Indeed, after adjusting for inflation, General Fund spending on services will be 9.1% less at the end of this year than under Republican Gov. George Ryan back in FY 2000. Meanwhile revenue growth from most taxes that feed the General Fund was stagnant or declined in real terms since then.

Which means fixing state tax policy to work in the modern economy and generate adequate revenue growth is the only way to resolve the state’s fiscal problems sustainably. To borrow a phrase from the governor’s budget address: “there are no magic bean fixes.”

• Ralph Martire is Executive Director of the Center for Tax and Budget Accountability, a fiscal policy think tank, and the Arthur Rubloff Professor of Public Policy at Roosevelt University. rmartire@ctbaonline.org