Illinois sees ‘unprecedented’ budget pressure from Trump cuts

Illinois Governor JB Pritzker’s budget office is warning that the state is facing higher costs and more uncertainty as President Donald Trump’s administration threatens to pull back federal funding.

“Over the past year, federal policy changes have altered the federal-state partnership by shifting costs to states and reducing support for longstanding programs that serve working families,” according to a press release from the Governor’s Office of Management and Budget on Friday. “Unlike the federal government, states across the country - including Illinois - are required to balance their budgets, and as repeatedly stated, Illinois cannot backfill billions of dollars as the federal government makes reductions.”

The office warned of the “unprecedented” budgetary pressures as the governor prepares to present his fiscal 2027 budget proposal on Feb. 18. Illinois is already expecting $587 million less in revenue for the year through June 30, due to some provisions in Trump’s signature tax cut legislation that largely mean less collections from corporations, according to the update to its economic and fiscal policy report initially issued in October.

Last month, the federal government threatened to halt some federal funding for child care programs in five states, including Illinois. A judge temporarily blocked attempts to halt the money.

If the federal government pulls back on those safety net programs, the state would face tough choices on backfilling the lost federal funds or reducing services. The loss of federal child care and the Temporary Assistance to Needy Families program dollars would impact Illinois with a loss of about $1 billion in fiscal year 2027, according to the release from the budget office.

“While there have been already budgetary challenges in fiscal year 2026 due to federal actions, with potentially more in fiscal year 2027, the scale of the impact is expected to continue to grow over the next few years,” according to the report.

The federal legislation also includes mandates that will require Illinois to invest more in staff and upgraded technology for Supplemental Nutrition Assistance Program and Medicaid changes, and that’s projected to cost the state more than $100 million over the next two years to prepare to make those changes, according to report.

Since taking office in 2019, Pritzker has overseen seven consecutive on-time budgets and 10 credit-rating upgrades that pulled the state back from the brink of junk status. Still, a preliminary estimate from October projected an approximately $2 billion shortfall in the coming fiscal year.