GOMB Releases Annual Economic and Fiscal Policy Report

SPRINGFIELD — Today, the Governor’s Office of Management and Budget (GOMB) released the annual Illinois Economic and Fiscal Policy Report, outlining the state’s long-term fiscal outlook. This year’s report details the significant impacts of federal tax and spending policies—particularly the Trump Administration’s H.R. 1 Budget Reconciliation Bill—on Illinois’ economy and revenues. The report provides a multi-year perspective on the projected long-term impact of current federal policies on Illinois’ budget.

Despite these headwinds imposed by the federal government, the Governor’s Office and GOMB remain committed to fiscal responsibility and passing a balanced budget for fiscal year 2027 while maintaining core services for Illinois residents. GOMB will continue to monitor economic forecasts closely, as tariffs, inflation, a weakening labor market, the federal shutdown, unpredictable federal actions, and global geopolitical developments could affect the state’s economy in unforeseen ways over the next year.

Some of the report highlights include:

State Revenue Impacts from H.R. 1

Through the first quarter of fiscal year 2026, several state revenue sources have performed stronger than expected, but GOMB projects that H.R. 1’s negative impact on business tax collections will outweigh these gains. General Funds revenues are now projected to be net $449 million lower than earlier estimates due to an estimated $830 million reduction in state tax revenue in FY2026 due largely to automatic state tax law conformity with federal corporate tax cuts. Ongoing uncertainty from tariffs, inflation, a weakening labor market, the federal shutdown, and unpredictable actions by the Trump Administration continues to affect the economic outlook.

SNAP and Medicaid Funding Pressures

H.R. 1 makes major changes to Illinois’ - and all states’ - Supplemental Nutrition Assistance Program (SNAP) and Medicaid programs. For SNAP, the federal government will shift an additional 25% of total program administrative costs to the state —about $80 million annually—and imposes a new state match requirement if payment error rates exceed 6%, potentially adding as much as $705 million in costs by FY2028. Additional new requirements put at risk an estimated 360,000 Illinoisans from losing SNAP benefits.

For Medicaid, H.R. 1 limits provider taxes and changes eligibility rules, gradually cutting federal funding by $2.8 billion annually by FY2031, which would require an additional $1.7 billion in state contributions and could reduce total Medicaid program support by $4.5 billion. Other provisions, including work requirements, put at risk 330,000 Illinoisans to lose benefits.

Mitigating the Impact of Trump’s Budget Bill and Economic Policies

While no state—including Illinois—can fully backfill federal cuts, Gov. Pritzker remains committed to mitigating their impact where possible and doubling down of fiscal responsibility. Earlier this month, he directed state agencies to reserve up to 4% of FY2026 General Funds appropriations to help offset the effects of Trump’s harmful economic policies while maintaining core services. To further protect the state, Gov. Pritzker and the General Assembly approved tools in the FY2026 Budget —including expanded Comptroller and Treasurer authorities and the creation of the BRIDGE Fund—to manage operations and programs during federal uncertainty and address short-term revenue shortfalls. These measures will enable Illinois to respond quickly to delayed federal funding and other unexpected economic pressures from the Trump Administration.

The full Economic and Fiscal Policy Report is available online here.

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