Paul Vallas: Pritzker’s credit upgrades come with a nearly $86 billion tax bill

Recent credit upgrades are from tax and fee hikes, not growth.

Gov. J.B. Pritzker’s celebration of Illinois’ recent credit upgrades as proof of his financial prowess is misleading. The upgrades are the direct result of his willingness to raise taxes and fees nearly every year.

Credit rating agencies reward a government’s demonstrated ability and commitment to meeting its short-term financial obligations. Pritzker has repeatedly met them not through structural reform but by asking more of Illinois taxpayers.

The agencies favor consecutive balanced budgets, growing rainy-day funds and eliminated bill backlogs. With Pritzker’s almost dictatorial control of the veto-proof Democratic majorities in the General Assembly, Illinois has easily achieved these benchmarks by enacting 63 taxes and fees during his time as governor.

The increased tax burden under Pritzker has cost taxpayers more than $85.6 billion in higher taxes and fees through fiscal 2026, and the six tax and fee hikes in the new budget are expected to cost another $815 million to $1.4 billion in fiscal 2027. An influx of federal COVID money also helped Pritzker pay down debt.

Despite the recent upgrades, Illinois’ credit rating remains the lowest of any state in the nation. The driver of this poor standing is simple: nation-leading pension liabilities that state leaders refuse to address and that rating agencies cannot ignore. Illinois remains an outlier among states because of its high leverage and fixed costs, driven primarily by massive unfunded pension liabilities. State leaders are nowhere near solving this crisis.

While short-term budget proposals attempt to close immediate gaps, they leave the state’s underlying structural deficit completely unaddressed. Illinois’ revenue base is not growing fast enough to support its spending commitments. Recent revenue gains have been driven almost entirely by policy changes — higher taxes and fees — rather than genuine economic expansion.

Revenue growth from sources other than tax increases fell far below inflation, reflecting broader economic weakness across Illinois. Factoring out tax and fee hikes, organic revenue growth has averaged less than 1% annually over the past two decades. Lawmakers were forced to assemble just under $1 billion in one-time and recurring revenues just to balance the latest state budget.

Real revenue growth has relied heavily on post-pandemic individual and corporate income tax surges. Meanwhile, sales tax collections have declined in real terms because Illinois maintains one of the narrowest sales tax bases among the 45 states with a sales tax — the state taxes goods heavily while largely exempting the service sector.

Moody’s and independent analysts confirm that Illinois faces deep economic headwinds, such as:

• Economic underperformance: Real GDP growth in Illinois is roughly 7.9% since 2019, compared to a 17.6% national average, ranking Illinois 46th among the 50 states.
• Flat job growth: Illinois’ private-sector job growth is in the bottom five states. Such jobs grew by less than 0.1% from 2018 to 2025 in Illinois, compared with a national rate of over 6%.
• Wealth outmigration: Illinois ranks second in the exodus of households aged 26-35 and third among those aged 35-45 earning over $200,000. Those outmigrants take significant adjusted gross income out of the state.

While Illinois ranks at or near the top nationwide in combined state and local tax burden, the state is near the bottom in measures of economic mobility and racial equity in education.

Rather than delivering a thriving, progressive economy, current policy has yielded higher taxes, substantial long-term debt, persistent structural deficits, weak growth, restricted school options and public safety concerns.

Do not be misled by temporary credit rating adjustments. Pritzker’s tax-and-spend trajectory leaves little room for long-term fiscal stability, particularly as federal pandemic relief has expired.

Without fundamental structural reforms, Illinois taxpayers should prepare for continued deficit pressures and subsequent tax increases — accelerating the departure of both families and businesses.