(Bloomberg) -- Illinois Governor JB Pritzker proposed an approximately $56 billion budget for the coming year as the state faces higher costs and more uncertainty around federal funding under President Donald Trump.

Pritzker on Wednesday laid out a revenue proposal that spends about 1.6% more than the current year and counts on rising individual income tax collections and a proposed new fee on social media tech companies to help cover increasing costs for items including pensions, public safety and education.

The Democrat warned about potential funding cuts by the federal government, which he has underscored since Trump came back to the White House in early 2025. An estimated $1.7 billion is at risk in Illinois from federal actions including policy changes and funding freezes that are currently in court, according to budget documents. State officials have described these as “unprecedented” budgetary pressures as the federal government shifts more costs to states.

“Over the last year, there have been nearly weekly threats to cut federal funding to state and local government partners, which have led to court challenges and uncertainty,” according to the fiscal 2027 budget presentation on Wednesday.

Still, Pritzker’s budget expects about $4.1 billion from the federal government for the state’s general funds in the coming year, little changed from this year, according to budget documents.

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.

The administration identified about $481.6 million in savings during the year through June 30 to put into reserves from various state agencies to provide budget stability amid the risk of federal cuts. The loss of federal funding for any key program is likely to be a big hit for Illinois, especially given large costs for its underfunded pensions.

Spending Plan

For the year starting July 1, Pritzker is proposing a spending plan including more than $10.7 billion for contributions to the state’s underfunded retirement systems and $15.4 billion for education. His budget office is projecting revenue of about $56 billion, compared to $54.8 billion projected in October, given higher individual income tax collections. The slight increase in spending over last year is driven by education, pensions and medical expenses, and without those items, the jump would be less than 0.5%, according to budget documents.

“Prudence demanded that this year’s budget proposal seeks a discretionary spending increase that is less than one half of one percent,” Pritzker said in his prepared remarks. “It levels off and in some cases reduces programs that are important to me – some of which were proposals of my own. But I believe that the imperative of responsible governance and overcoming the fiscal irresponsibility of past decades must come ahead of the interests of any one politician, program, or party.”

The budget office boosted the revenue forecast for the current year by $399 million from its October forecast to $55.2 billion, partly resulting from individual income and excise taxes and investment income.

The administration’s proposal for the general funds, the main accounts that the state uses to run its services, would yield a surplus of $24 million for the year starting July 1, according to budget documents. That compares to a roughly $2 billion deficit that Pritzker’s budget office projected in October as part of a five-year outlook.

Costs for health care and human services, including the state program for low-income residents, together will reach $20 billion for the general funds in the coming year, according to the budget proposal.

Illinois remains the lowest-rated US state even after earning 10 credit rating upgrades since Pritzker took office in 2019.

The state legislature, which is controlled by Democrats, will hold hearings over the next couple of months and is expected to vote on the budget before June.

(Adds details on spending plan starting in second paragraph.)

Most Read from Bloomberg Businessweek

The Georgia Pastor Accused of Defrauding the VA of Nearly $24 Million

America’s Most Powerful CEOs Are Awfully Quiet Lately

Millennials Melted Their Brains With Screens. Their Kids Want None of It

Trump’s Foreign Adventures Will Cost Taxpayers Billions

Gen Alpha Can’t Be Ignored

©2026 Bloomberg L.P.