SPRINGFIELD – Illinois is on target to bring in more money than expected this year.
The state’s Commission on Government Forecasting and Accountability said through the first nine months of FY2026, Illinois collected more than $1.57 billion in additional tax revenue, or 4.2%, compared to the same period a year ago. CGFA expects the state will wind up just below that pace when the budget year ends June 30.
The windfall provides a rosier outlook for Illinois compared to the dire fiscal warnings of earlier in the year. Illinois saw a year-over-year decline as of last July. It also shows the state on pace to finish ahead of the projected revenue used to craft the current budget.
Personal income taxes, the largest revenue source, have grown 4.9%.Wage growth has offset flat employment numbers, according to CGFA.
Sales tax receipts are also running above estimates while corporate income taxes are lower, due mainly to provisions in the One Big Beautiful Bill that passed congress last summer.
Slower growth is being forecast for the next year and could bring a more cautious approach to the budget-making process.
On Wednesday, the Senate Appropriations Committee called top officials to testify about their proposed fiscal plans. The hearing happened as lawmakers themselves faced an end of the week deadline to advance bills out of the chamber.
While many of the spending numbers have been public since the governor’s delivered his budget address in February, there were other matters brought up. Parts of the hearing turned contentious, including during the questioning of Treasurer Michael Frerichs.
Sen. Rachel Ventura, D-Joliet, raised concerns over the investment of state funds in foreign government bonds. Ventura pressed Frerichs on whether current Illinois investments could be in any way linked to international conflicts with human rights concerns.
Frerichs emphasized that foreign investments have been standard practice in Illinois for the past 20 years and stressed his role as a fiduciary, not a policy maker.
“My job is not to engage in foreign policy. My job is to maximize returns,” said Frerichs, who the committee acknowledged has surpassed the performance of his past five predecessors.
Ventura’s remarks were admittedly tied to her role as chair of the Human Rights Committee and revolved around Illinois state funds being used to buy Israeli government bonds.
In response, Frerichs explained how state statute allows for the Treasury to invest up to three quarters of 1% of the state portfolio into foreign bonds.
“We invest in Israel bonds, $100 million,” he said, adding that any investments made by the state must meet criteria set in state law.
Frerichs further discussed the broader role of his office, noting how investment returns play a key role in supporting state programs and operations.
“Our office made a record $2.5 billion in investment earnings for state and local governments in fiscal year 2025,” said Frerichs. He said that those returns – alongside with more than $2.4 billion in unclaimed property returned to Illinois residents since 2015 – are a part of the broader effort to bring value to the state.
State Employee Healthcare
Lawmakers also raised concerns about rising healthcare costs for state employees, which are expected to rise up to 9% next year. Some questioned whether the state is adequately evaluating the effectiveness of its spending – or conducting analysis to judge the efficiency of spending – particularly as costs continue to rise year over year.
“It’s breaking the bank… it’s starting to become a significant issue,” said Sen. Chapin Rose, R-Mahomet.
Lawmakers also pressed officials on measures of long-term outcomes tied to that spending.
“Are we doing the difficult analysis to determine if what we’re spending is actually saving us money?” Rose asked.
Officials acknowledged the complexity of measuring cost savings tied to improved health outcomes, but said current efforts are focused on improving care and managing long-term risk.
More hires in state government
Officials from Central Management Services pointed to improvements in state operations, such as a growing workforce and faster hiring timelines. The agency reported Illinois now employs nearly 57,000 workers — the highest level since 2007 — while vacancy rates and hiring delays have declined in recent years.
“We have reduced the average time to hire from 269 days to approximately 93 days today,” Director Raven DeVaughn told lawmakers, describing a significant improvement in addressing longstanding staffing challenges.
What had been a paper-driven process and grading system has undergone a modernization effort making it more efficient for agencies and applicants.
What comes next
The main task for lawmakers and the governor, as it is each year, is to pass a new budget before adjourning the spring session. It’s expected to wrap up at the end of May, giving them just a handful of weeks to make final decisions that will determine funding for a variety of areas over the next fiscal year.
Along with hearings, behind-the-scenes budget negotiations are taking place involving the General Assembly and the governor’s office. Many agreements are already in place.
There are also revenue enhancements proposed — items like a social media tax and sales tax changes —
that are expected to impact future revenue growth.
Both the governor's budget office and CGFA will release more revenue estimates prior to lawmakers wrapping up their work. Uncertainty over energy costs, foreign conflicts, tariffs and the overall economy will be taken into account.
But for those waiting to see how they’ll fare in the new budget, it’s likely the final plan won’t be released until shortly before it comes up for a vote next month.
