April taxes could provide revenue boost
By BEN SZALINSKI
Capitol News Illinois
bszalinski@capitolnewsillinois.com
SPRINGFIELD — As the Governor’s Office of Management and Budget Director Alexis Sturm warned a House committee that uncertainty about President Donald Trump’s economic and administrative policies could affect Illinois revenue, the president announced new tariffs will take effect Tuesday on imports from some of Illinois’ top trading partners.
After initially pausing implementing 25% tariffs on products from Canada and Mexico, Trump announced in a social media post Thursday morning that tariffs will begin on March 4. In addition, he said the U.S. will add another 10% tariff on Chinese goods.
The president alleged drugs were still coming into the United States at “unacceptable levels.”
Meanwhile in the Illinois Statehouse, Sturm told the House Revenue and Finance Committee that revenue projections in Gov. JB Pritzker’s introduced budget account for the possibility of tariffs affecting the economy.
“There’s a lot of uncertainty in our outlook based on what’s going on at the national level regarding tariffs, tax policy, what the Federal Reserve is going to do,” Sturm said.
Read more: Trump tariffs could impact hundreds of billions of dollars of trade in Illinois
The governor’s $55.2 billion budget is based on the December S&P Global forecast that projected stable economic growth and considered some of Trump’s top economic policies, including tariffs and tax cut extensions, would be implemented, Sturm said.
After the governor’s budget office in November projected flat revenue growth for fiscal year 2026 based on the September S&P forecast, the December forecast caused state officials to revise their forecast upward by $1.8 billion in the upcoming fiscal year.
Read more: Pritzker calls $55.2B budget ‘responsible and balanced’ – but warns Trump policies could upend it
There’s also a risk that Trump’s administration pulls back federal funding states are expecting. The current fiscal year budget for the state expects to receive upwards of $20 billion in federal funding, but earlier this week, Pritzker wrote a letter to the federal Office of Management and Budget saying the federal government is withholding $1.9 billion that has already been promised to Illinois.
Read more: Pritzker says federal funds still being withheld; warns of further spending cuts
“There’s no real way to prepare for that,” Sturm said. “Obviously we are watching closely what’s going on at the national level, but I think the governor has tried to make clear that this state at this level of operations can’t cover any decisions that the federal administration or Congress makes to reduce its payments to Illinois.”
Asked whether there are any spending cut plans for downturns in revenue projections, Sturm the governor’s office doesn’t have a backup plan.
“At this point, no,” Sturm said. “I think the important thing to watch is what happens in April.”
Sturm hinted there could be some good news for state finances when income tax revenue is reported at the end of April. She said state officials are expecting a “pretty significant April tax payment,” which could cause state officials to reevaluate their revenue projections for the current fiscal year.
Personal income tax receipts for the state are up 8% for the fiscal year through January, according to the non-partisan Commission on Government Forecasting and Accountability.
But new tariffs on imported goods could add more uncertainty to the state’s economy.
IMPORT PARTNERS
Illinois received $127.8 billion of imports from China, Canada and Mexico in 2023, according to the Department of Commerce and Economic Opportunity. Canada is Illinois’ largest partner for both imports and exports, with the state receiving $65.6 billion of goods from the country in 2023.
Illinois is highly dependent on oil and gas from Canada, meaning consumers could be in line for higher energy and gas prices due to Trump’s tariffs. About 72% of Illinois’ imports, or $47.4 billion, from Canada in 2023 was oil and gas, according to DCEO.
China had the second-highest volume of imports to Illinois in 2023, with $43.9 billion worth of goods, including $27.2 billion of computers and electronics.
CANADIAN ENERGY
Illinoisans might end up paying more for alcohol and cars if tariffs are implemented on Mexican goods. Illinois received $18.3 billion of imports from Mexico in 2023, including $5.9 billion of beverages and tobacco and $2 billion of transportation equipment.
China, Canada and Mexico received $37.9 billion of exports from Illinois in 2023, nearly half of the state’s exports for the year. This included a combined $3 billion in agricultural goods to China and Mexico and nearly $4 billion of machinery to Canada.
Canada’s proposed targeted tariffs include penalties on American exports of food and metal products, according to the Canadian Broadcasting Company. Illinois sent $3.2 billion of food and primary metal manufacturing products to Canada in 2023.
Capitol News Illinois is a nonprofit, nonpartisan news Service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.
Governor’s Office of Management and Budget Director Alexis Sturm speaks to the House Revenue and Finance Committee in Springfield on Thursday, Feb. 27, 2025. (Capitol News Illinois photo by Andrew Campbell)
