Gov. JB Pritzker's $56B state budget proposal includes new taxes on social media companies, casinos

SPRINGFIELD — Gov. JB Pritzker wants to implement a new tax on major social media companies like Facebook, X and TikTok to help balance a $56 billion state budget, as part of a state spending plan that also counts on additional tax revenue from casinos and large corporations, according to details released Wednesday.

The governor’s latest budget proposal, the eighth of his tenure, doesn’t rock the boat much otherwise as Pritzker and Democrats who control the Illinois General Assembly emphasize cost-of-living concerns in a midterm election year.

Declaring it “a moment to stand up for Illinois and be loud for America,” Pritzker delivered his proposal with his annual State of the State address at the Capitol, outlining an “affordability agenda” to help bring down costs for residents in terms of health care, housing, education and energy.

As the governor mulls a 2028 presidential run, tried to highlight how Trump administration policies are raising such prices.

In his address, Pritzker outlined his spring legislative agenda, which will include a push to cut red tape on local zoning laws to allow for more duplexes, granny flats and other housing. He'll also advocate for a ban on cellphones for students in schools, along with a crackdown on junk fees on many online purchases.

Pritzker’s budget team pointed to persistent threats of funding cuts under President Donald Trump’s administration as the impetus for what largely amounts to a maintenance budget at about $56 billion in spending, up about $878 million from the current budget year and landing at a projected surplus of $24 million.

"Unlike the federal government, every year Illinois must balance its budget," Pritzker said. "When Donald Trump is taking resources away that are rightfully ours, none of us — Democrats or Republicans — should be OK with that. So as we embark on this journey of maintaining our state’s now re-established record of fiscal responsibility, I want to say to anyone on either side of the aisle: if you want to talk about our FY2027 budget, you must first demand the return of the money and resources this president has taken from the people of Illinois."

The governor’s office had projected a $2.2 billion budget shortfall in October, now estimating $399 million in lost revenue next year due to congressional Republicans’ funding cuts for many social services and other federal programs, and the state assuming about $100 million in new administrative costs for food assistance and Medicaid programs. Meanwhile, the state is fighting in court to retain about $1 billion in various federal grants.

Pritzker’s office is counting on about $4.1 billion in federal funds in the upcoming year as credit analysts predict a rocky year for the Illinois economy.

To help make ends meet, some $200 million would be banked from big social media companies that Pritzker wants to tax, based on the number of users they have in the state.

It’s similar to the tax Chicago Mayor Brandon Johnson proposed in his city budget proposal last fall, a controversial measure that was retained in the alternate spending plan ultimately approved City Council members. Tech companies have vowed to challenge such a measure in court.

Chiding tech companies that “profit off of surveilling youth, creating addictive algorithms, and abandoning their responsibility to keep kids and consumers safe,” Pritzker’s plan would charge social media companies a monthly fee based on the number of users in Illinois they have beyond 100,000. That would be at rates of $0.10 per user up to 500,000 users; $40,000 plus $0.25 per user up to a million; and $165,000 plus $0.50 per user over a million. It would prohibit companies from passing those costs onto users.

The governor’s proposal also counts on $269 million in additional corporate income tax revenue by adjusting how much big companies can deduct as losses over several years.

Pritzker’s plan also would generate about $120 million by taxing table games at casinos at the same rate as slot machines, which are currently at a higher bracket. That’s the governor’s only proposed change to gambling taxation in the state after two years of major additional levies on the state’s massive sports betting industry.

It doesn’t include any of the progressive revenue ideas that had been pushed by the General Assembly’s left flank, including taxing digital ads and gains on billionaires’ assets, hiking taxes on offshore earnings and closing corporate tax loopholes.

Nor did Pritzker’s budget team mention a possible surcharge tax on millionaires, an idea that has been floated by Illinois House Speaker Emanuel “Chris” Welch that would require a state constitutional amendment. A similar Pritzker-backed initiative failed in 2020.

The governor’s spending plan includes $305 million for schools under the state’s evidence-based funding formula, a figure short of the usual $350 million because the remainder was used as part of a property tax relief program last year.

It also makes the state’s required $10.7 billion payment toward pension systems that are collectively facing more than $140 billion in unfunded liabilities. Pritzker anounced he'll renew his push to extend the state’s goal of 100% funding by 2048, instead of the current state law with a goal of reaching 90% funded by 2045.

Additionally, Pritzker’s spending proposal sets aside a flat $721.4 million for Monetary Award Program grants in financial aid for college students, while increasing public university and community college funding by 1%. The Department of Children and Family Services would see a $74 million budget increase to $1.7 billion. It also includes about $250 million for housing programs.

Pritzker’s budget proposal sets the stage for three months of negotiations in Springfield. Lawmakers have to approve a spending plan by the end of May, for the fiscal year that starts July 1.