Is Illinois Headed for Financial Disaster?

Illinois Is Running Out of Money—Fast

I live in Illinois, and I've lived here most of my life. I love it here. It’s got that Midwestern charm, lovely people, great schools, beautiful Lake Michigan, and an incredible downtown Chicago. There’s so much to do in and around the Chicagoland area.

But I’ve felt this for quite some time, and now more than ever, I strongly believe that Illinois is cooked—financially speaking. The state’s budget is out of control. Spending is through the roof, and taxpayers are footing the bill for everything with no end in sight.

And here’s the real kicker—there's only one way out of this mess: cut spending or raise taxes even more. Neither option is going to be pretty. I hate the thought of leaving, but if things keep going the way they are, there may be no other choice.

Let’s break down exactly what’s happening in Illinois.

A Budget That Doesn’t Add Up

Illinois is burning through cash like there's no tomorrow. If you don’t believe me, just look at these numbers. According to the Illinois Policy Institute, Governor J.B. Pritzker’s record-breaking $55.2 billion state budget for 2026 relies on more than $1.55 billion in boosted revenue estimates just to cover costs. But state reports suggest that reality could be much worse, leaving taxpayers to make up the difference.

On paper, the budget looks promising—big investments in education, healthcare, and social services. There are also efforts to strengthen the emergency rainy-day fund and pay down debt. But can the state actually afford it in the long run?

If the economy takes a downturn, keeping up with this level of spending will be a serious challenge.

The Pension Problem

One of the biggest financial problems Illinois faces is pension liabilities. Illinois already has one of the most underfunded pension systems in the country. The budget does include extra payments above the required minimum and aims for full funding by 2048. That sounds like a step in the right direction, but pensions still eat up a huge chunk of the state’s budget. These long-term financial risks threaten Illinois’ future stability.

What If the Economy Takes a Hit?

Another big issue is how much this budget depends on a stable economy. It’s based on optimistic revenue projections—assuming steady growth with no major disruptions. But what if federal policies shift? What if federal spending gets cut? What if tariffs start affecting Illinois businesses?

Any of these things could throw a wrench in the state's revenue stream, throwing the budget completely off balance.

Healthcare, Social Services, and Infrastructure—Who’s Paying for It?

Health and social services are getting a big funding boost, particularly Medicaid. There’s no denying these programs help people, but they come with ever-growing costs. And with federal COVID-era funding winding down, where’s the extra money going to come from?

Without a surge in revenue, Illinois will face tough choices—either cutting critical services or imposing even more financial burdens on its residents.

Infrastructure spending is another major focus. The state is pushing for big-ticket projects to boost the economy. Investing in infrastructure is smart—if managed well. But large-scale projects are notorious for going over budget, and if they don’t deliver, taxpayers could be left footing the bill.

Can Illinois Handle Its Debt?

Debt management is another mixed bag. On the bright side, Illinois is refinancing some of its debt to lower interest rates and paying down high-interest debt. However, the overall debt levels are staggering.

And then there's the reliance on federal funding. A big part of this budget assumes continued financial support from Washington. But that’s never a sure thing, especially with the way things are going politically. What if the federal government decides to cut funding? Illinois could be left scrambling, forced to make drastic decisions—either severe cutbacks or increased taxes.

Is Illinois Spending Money It Doesn’t Have?

At the end of the day, the budget looks ambitious—maybe even responsible in some areas. But when you crunch the numbers, it’s clear that Illinois might be spending money it doesn’t actually have. The state is counting on the best-case scenario: strong economic growth, steady federal aid, and rising revenues.

But what happens if things don’t go as planned?

People Are Leaving—And Fast

Illinois ranks as the third-highest state for population loss, trailing only behind California and New York. Over 56,000 residents have left, placing Illinois at 48th in the nation for retention. More people are choosing to leave than in almost any other state.

Why? High taxes. According to polling from NPR and the University of Illinois, the overwhelming reason people are moving out is the cost of living and taxes.

What Should Illinois Do?

I want to hear from you. What do you think is the most critical step Illinois should take right now to solve its financial challenges? Let me know your thoughts in the YouTube video comments.