What Counties Should Watch in the Governor’s Budget Address

When Governor JB Pritzker delivers his annual State of the State/Budget Address on February 18, county officials should listen closely not only for topline spending numbers, but for signals about how Illinois plans to navigate a rapidly shifting federal and economic landscape. This year’s speech comes amid unusual fiscal uncertainty driven by potential federal funding reductions, a slowing state economy, and major policy changes in Washington that could reshape state and local budgets over the next several years.

The governor will outline a constitutionally required balanced budget, but the path to achieving that balance is becoming narrower. Federal funding streams that support health care, human services, and food assistance are under pressure, and changes at the federal level are already beginning to show up in state revenue projections. For counties, this matters because many of these programs are administered locally, often with county governments serving as frontline service providers or partners. Any reduction or restructuring at the state level could translate into higher local costs, reduced service capacity, or increased administrative burdens.

Federal Uncertainty and Local Consequences

One of the biggest issues counties should watch for is how the governor frames the state’s exposure to federal policy changes. Adjustments to Medicaid, nutrition assistance, and other safety-net programs are expected to reduce federal support and increase state costs in coming years. If the state is forced to absorb more of those costs, lawmakers may look for savings elsewhere, which could put pressure on grants, shared revenues, and program funding that counties rely on.

Counties should also listen for any discussion of contingency planning. The state has already signaled a more cautious approach to spending, including holding back funds and limiting growth in certain areas. That posture could mean tighter state budgets for programs that support public health, behavioral health, public safety, workforce development, and social services—many of which are delivered or co-funded at the county level.

Economic Headwinds and Revenue Growth

The broader economic outlook is another key theme. Slower growth, challenges in manufacturing and agriculture, and uncertainty tied to trade policy all affect state revenue performance. If revenues flatten or underperform, counties could see slower growth in state support or increased competition for limited dollars. Rural counties, in particular, may want to pay attention to how the administration addresses agriculture, manufacturing, and logistics, since those sectors are central to many local economies.

Counties should also watch for any mention of revenue assumptions and whether the administration is building in buffers for economic volatility. Conservative forecasting at the state level often translates into restrained spending growth, which can affect everything from infrastructure investment to human services funding.

Health Care Pressures and Medicaid Changes

Health care financing is likely to be one of the most consequential issues for local governments over the next several years. Upcoming limits on provider taxes and changes in federal Medicaid support could create significant budget gaps for the state. If those changes move forward, lawmakers will face difficult choices: find new revenue, shift costs, or reduce program scope.

For counties that operate health departments, safety-net hospitals, or behavioral health systems, or that partner closely with providers, these decisions could have direct operational and financial impacts. Watch for whether the governor signals early action to prepare for these changes or defers major decisions to future budget cycles. Either approach has implications for local planning and long-term service delivery.

Current-Year Adjustments and Spending Restraint

The state has already taken steps to manage short-term revenue pressures, including holding back spending and limiting hiring in certain areas. Counties should listen for indications that this restraint will continue into the next fiscal year. A cautious budget could mean fewer new initiatives, slower growth in existing programs, and a continued emphasis on holding the line on discretionary spending.

This matters for counties because many local budgets are built on the assumption of relatively stable state partnership funding. Prolonged restraint at the state level can shift more responsibility—and risk—onto local governments.

The Tax Debate and What It Could Mean Locally

Finally, the governor’s speech will likely touch on the broader debate over revenue options. Some lawmakers are pushing for significant changes to the tax structure to generate new revenue, while others are warning against additional tax burdens. Counties should pay attention not just to whether new taxes are proposed, but to the type of taxes under discussion and how stable or volatile those revenue sources might be.

The outcome of this debate matters locally because state revenue stability affects everything from shared revenues (LGDF, sales taxes, etc.) to grant programs and mandate pressures. A more volatile or uncertain revenue system at the state level can make long-term planning more difficult for counties.

Bottom Line for Counties

This year’s budget address is less about announcing big new programs and more about how Illinois plans to manage risk in an unpredictable environment. Counties should listen for:

• How the state plans to respond to federal funding changes
• Signals of continued spending restraint or program prioritization
• Early warnings about health care and Medicaid financing shifts
• The administration’s approach to economic uncertainty and revenue forecasting
• The direction of the tax and revenue debate

Each of these will shape the fiscal environment counties operate in over the next several years, affecting everything from service delivery to long-term financial planning.

As the details of the budget proposal come into focus, county leaders will need to engage early and often with their state legislators to explain what these decisions mean on the ground. Every affected interest will be making its case, and counties can’t afford to sit on the sidelines. If we don’t tell our story, someone else will—and county priorities risk being left out of the final conversation.