2 ways to improve Illinois spending decisions

Lawmakers make costly decisions without understanding the economic impact.

Illinois lawmakers should get economic impact studies before enacting major taxes and regulations and review costly policies they’ve already enacted.

The state faces nearly $21 billion in projected budget deficits in the next five years, with expenditures projected to grow nearly 20% and revenues only 11%.

Lawmakers can revisit policies that were enacted with limited analysis of their long-term cost. Illinois vastly underestimated spending on migrant health care. In 2023 alone, the state expected to spend $220 million, but the total came in nearly three times higher, at $644 million. Lawmakers eventually reversed part of this policy, but only after lengthy audits after the policy was enacted. A quicker reviewing of the policy that didn’t require audits could have helped.

State lawmakers also passed economically damaging business taxes for fiscal 2026 with little discussion or debate, prioritizing short-term increases in revenue while risking long-term economic growth in a state whose economy is already falling behind.

The bipartisan Illinois Joint Committee on Administrative Rules is required to consider the financial impact of proposed rules on small businesses and local governments, but its authority is limited. Either expanding its role or creating a similar mechanism to include comprehensive economic impact reviews of major tax and policy changes and their long-term consequences would provide lawmakers more information before making decisions. Too often, policy changes are adopted with little scrutiny, often in the final hours of the legislative session.

Regulations are another issue. As the fourth-most regulated state in the U.S., with over 282,000 restrictions, many of them unnecessary and costly, Illinois should more closely review economically significant regulations before they take effect.

The state should look to the federal Regulations from the Executive in Need of Scrutiny Act. That bill would mandate that the U.S. Congress explicitly approve any “major rules,” or those that would have a significant impact on the economy or business.

Illinois could adopt a similar approach, requiring legislative approval for regulations with at least $10 million in economic impact. This could ensure that major regulatory decisions receive both thorough analysis and democratic accountability.

A threshold of $10 million in annual economic impact would ensure that:

• Economic impacts are evaluated early in the rulemaking process.
• Lawmakers have ample time to review proposed rules.
• Costly or ideologically driven rules are prevented from taking effect by default.
• There is legislative responsibility for economically significant policy decisions.

Illinois finances will only deteriorate further if lawmakers focus on short-term policymaking rather than the future health of Illinois. For a more thorough roadmap on fiscal reforms, see our report Illinois Forward 2027.