Pritzker’s proposed $56 billion budget calls for social media tax

As Illinois awaits court decisions about federal funding cuts and braces for more amid rising costs, Gov. JB Pritzker is proposing limited new spending — and yearning for “normal problems.”

The governor delivered the final budget address of his second term on Wednesday, proposing a spending plan that largely maintains the status quo and forgoes significant broad-based tax increases.

Pritzker also accused the Trump administration of costing Illinois billions of dollars in lost revenue via cuts or policy changes.

“I have joked with many of you that I wish I could spend just one year of my governorship presiding over precedented times,” he told the joint session of the General Assembly.

He said the proposed $56 billion fiscal year 2027 budget required hard choices, but argued it is ultimately the best path for the state to navigate its way through uncertainty driven by Washington.

“It levels off and in some cases reduces programs that are important to me — some of which were proposals of my own,” Pritzker said. “But I believe that the imperative of responsible governance and overcoming the fiscal irresponsibility of past decades must come ahead of the interest of any one politician, program or party.”

The proposal represents an increase of $878 million, or 1.6%, from the current year. But most of that new spending is in required categories like education and pensions. Outside those areas, new spending will grow by just 0.5%.

On the revenue side, the governor is expecting $56.1 billion in FY27, an increase of $830 million from current-year projections.

Pritzker is opting for targeted tax increases that will be paid by businesses rather than consumers. His proposal includes taxing social media companies, raising a projected $200 million in revenue.

Social media tax

Pritzker’s plan calls for raising $589 million in new revenue.

The hallmark of the plan is a new tax on social media companies with at least 100,000 users in Illinois. The companies would be taxed on a graduated scale beginning at 10 cents per user each month. Platforms with a million or more users would be taxed $165,000 each month, plus 50 cents each month on the number of users over a million.

Pritzker is hoping to raise $200 million from the new tax.

“Those companies are profiting from online engagement of Illinois consumers, and they currently contribute nothing to ameliorate the negative effects of their platforms,” Pritzker said.

Budget officials in the governor’s office said they aren’t assuming the worst-case economic scenario in FY27. They said the budget is based on S&P Global’s January outlook, which shows a stable forecast that assumes personal consumption will continue to grow, corporate profits will remain flat and the economy won’t be plunged into a recession.

Federal uncertainty

Pritzker’s administration is also assuming it will win court battles to continue receiving federal funding that President Donald Trump’s administration has attempted to cut.

Pritzker pegged the fallout from federal cuts at $8.4 billion for the state.

“These are not handouts,” he said. “These are dollars that real Illinoisans paid in federal taxes and that have been constitutionally approved by our elected Democratic and Republican representatives in Washington.”

The governor, who many speculate will run for president in 2028, admonished the Trump administration for denying disaster relief funding to Illinois and instead requiring the state to paint over any rainbow crosswalks in Chicago.

But the governor’s budget office also projects the state will face multibillion dollar deficits in the coming years as more cuts and new requirements for social services passed by Congress take effect.

State spending

Funding for K-12 public schools via the state’s Evidence-Based Funding formula would increase by $305 million and, for the second year in a row, exclude roughly $50 million that would be designated for property tax relief.

Fiscal year 2027 will be the first year the Department of Early Childhood begins full operations, with $2.1 billion in General Fund spending for the new agency.

The state’s universities and community colleges will see just 1% growth in spending.

A program that provides health care to immigrant seniors regardless of whether they’re living in the U.S. with legal permission is also remaining in the budget, despite pushback from Republican lawmakers.

The program was significantly scaled back in the FY26 budget and limited only to qualifying seniors. It is projected to cost $143.6 million in FY27. Last year’s budget cut a similar program for immigrant adults.

The Department of Children and Family Services would see an increase of $74 million, or 4.7%, in Pritzker’s proposal.

Pensions would be fully funded with $10.7 billion as Pritzker continues to pitch the General Assembly on supporting a pension reform plan.

Local governments might get a smaller cut of revenue, however. The governor proposed lowering the percentage of income taxes that goes to local governments to 6.23%. That would keep $60 million in state coffers, budget documents show.

Pritzker’s nonbudgetary proposal included: