IN THENEWS

IVCA Illinois Legislative Report
David Stricklin, IVCA Legislative Liaison, Stricklin & Associates

LANDMARK TRANSIT PLAN BECOMES LAW

Governor Pritzker and legislative leaders yesterday celebrated signing into law the mass transit reform and funding package passed during the veto session. The bill was initially to be funded by a grab-bag of taxes including a “billionaires” tax on unrealized capital gains. In the end the choice was to focus on redirecting revenue already within the transpiration system while also increasing tolls on drivers using the Illinois Toll Highway system.

GOVERNOR INKS TRANSIT BILL

The legislation signed Tuesday, which state lawmakers approved in October after months of negotiations and several failed legislative attempts, will provide about $1.5 billion annually for regional transportation from a diversion of the motor fuel sales tax, an increase to a sales tax in the Chicago region and interest from the state’s road fund. The new law also raises tolls on the Illinois Tollway by 45 cents. 

HIGHWIRE ACT ON CITY OF CHICAGO BUDGET

This newsletter focuses on State issues, but the City of Chicago is a big part of the State of course and the efforts to finalize a budget might impact policy and revenue decisions at the state level, so with that in mind we will cover the CITY HALL BUDGET BATTLE

The new plan relies upon several tax hikes: a 5 cents-per-bag — or 50% — increase in the city’s plastic bag tax, projected to bring in $8.7 million; liquor tax increases estimated to raise $6 million; and an expansion of the area where ride-share surcharges apply.

The proposal also relies upon several untested plans to earn the city money without taxes. It estimates the city will earn $29.3 million by selling new ads on bridge houses, light poles and city vehicles. And it pegs a new augmented-reality advertising program as a $6 million boon, an amount lower than previous estimates from the group.

The most eye-catching new cash cow: the legalization of video gambling terminals across the city. That controversial plan, long-debated in the City Council, would clear the way for gambling at venues across the city to bring in $6.8 million in licensing fees next year, according to the plan.

LOOKING AHEAD TO 2026

The Illinois General Assembly is in recess until mid-January and even the January session days are not expected to be particularly active. The governor delivers his budget address in mid-February, and the state holds a primary election March 17. After that, we should expect more intense activity in the Capitol.

The governor and legislative leaders have in the past two budget cycles needed approximately $1B in new revenue to make ends meet and the transit bill mentioned earlier also raised new revenue. Policy makers are following trends in tax receipts which is outlined here by the Commission on Government Forecasting and Accountability:

COGFA NOVEMBER REPORT

CIVIC FEDERATION OUTLOOK ON ILLINOIS FISCAL PRESSURES

And the ongoing obligations owed to the state’s pension systems:

COGFA PENSION BRIEFING

ILLINOIS POLICY INSTITUTE ON PENSION DEBT

Illinois’ state pension debt was $143.5 billion at the end of fiscal year 2025, down slightly from the prior year, according to a new report from the state legislature’s Commission on Government Forecasting and Accountability. Across the nation, Illinois remains the only state with over $100 billion in unfunded state pension liabilities.