Understanding the pieces of Pritzker’s 2027 budget address

If you run a business in the suburbs, you learn to read Springfield budgets the same way you read a lease renewal: not for the lofty promises, but for the fine print that tells you what your costs will be next year.

Gov. JB Pritzker’s fiscal year 2027 proposal is heavy on fine print.

His $56 billion budget, the largest in state history, counts on more than $700 million in new revenue and redirects money to make the math work.

In plain terms, it leans on $589 million in tax hikes and fees, another $139 million in fund sweeps and about $1 billion in upgraded revenue assumptions after a shortfall was projected earlier.

And while the governor touts “savings” and a $24 million surplus, much of the budget’s breathing room comes from shifting money around. Under his proposal, the biggest switch comes from extending the cap on deductions for corporate net operating losses, a move expected to raise $269 million. That cap was supposed to sunset, but instead it gets stretched out, limiting how much of past losses businesses can use to offset current profits.

A manufacturer can lose money one year, claw back the next and still be paying today’s bills from yesterday’s hole. Deductions for net operating losses are meant to recognize that. Capping them makes recovery more expensive, and it’s a particularly loud message in a state already known for high business taxes.

Pritzker also has added a first-in-the-nation fee on large social media platforms that’s projected to bring in $200 million. The state says the charge is aimed at tech giants, but any suburban business owner who buys ads, manages an online storefront or relies on social platforms to reach customers knows these added costs will be paid by the customer.

His proposal also takes another cut from the Local Government Distributive Fund by reducing the share of individual income tax collections sent back to municipalities to 6.23% from 6.47%. When the state keeps more, local governments have fewer options. That means cutting services, deferring maintenance or raising property taxes and fees.

That said, it’s not all spending-related. Pritzker put housing back in the conversation in a real way.

The governor pushed streamlined permitting, standardized timelines and reduced building mandates. Such moves could eliminate parking requirements that can cost builders tens of thousands per space and push housing prices higher. Pritzker’s plan could legalize more “missing middle” home options such as duplexes, triplexes and “granny flats.”

Pritzker’s proposals could help the suburbs add attainable housing near Metra stations, job corridors and growing downtowns. More residents could mean more customers, more workers and, over time, a broader tax base that can reduce pressure on property taxes.

For suburban businesses, fixing Illinois’ housing crisis could address workforce issues. Employers can’t hire if employees can’t find somewhere to live within a reasonable commute. Downtowns can’t fill storefronts if young families and workers are priced out of nearby neighborhoods.

This can be a good start for conversations in Springfield about how to expand opportunity in the state, not chase the same taxpayers harder each year.

If lawmakers want to make the budget process better — and make Illinois more competitive — they should start with a spending cap tied to inflation and population or economic growth, so that spending can’t outrun reality. Stop the fund sweeps that hide Illinois’ fiscal reality. Commit to honest multiyear budgeting that shows what today’s decisions mean five years out. And stop treating local revenue sharing as a piggy bank.

Illinois’ residents and businesses are still lagging other states after the pandemic and record-high inflation. They need fiscal predictability and discipline on the part of their leaders and a tax climate that doesn’t inhibit recovery. This budget, as proposed, still asks the suburbs to pay more now and trust that the bill won’t get bigger later.

• Matt Paprocki is the president and CEO of the Illinois Policy Institute.