New Report Finds Growing State Expenditures Could Constrain Future Budgets
Illinois state expenditures for fiscal year 2025 (July 1, 2024–June 30, 2025) are analyzed here as a companion to a previously published analysis of state revenues, drawing on final tallies of both revenues and expenditures.
Illinois ended FY2025 with expenditures of $119.51 billion and revenues of $118.16 billion, a near-balanced result despite a nominal fiscal gap of $1.35 billion. Both figures reflect the steady upward trend in state finances since 1998, punctuated only by the FY2022 surge in federal COVID-19 relief funding (Figure 1).
Figure 1. Illinois Expenditures and Revenue Totals, 1998–2025
Note: Shaded areas indicate national recession periods. The FY2022 spike reflects federal COVID-19 relief funding.
Medicaid remains Illinois’ largest expenditure category, growing 7.48% to $35.94 billion in FY2025—outpacing its already-rapid 27-year compound annual growth rate of 7.27%. Several other categories have also expanded significantly, including transportation (+13.38%), Human Services (+7.53%), and State Employee Healthcare (+20.62%).
The healthcare surge—rising from $3.16 billion to $3.81 billion—may be partly attributable to a mandated expansion of the State Employees’ Group Insurance Program (SEGIP) requiring coverage of injectable medications for adults with prediabetes, gestational diabetes, or obesity. Medical care inflation in the Chicago area was only 2.5% and SEGIP enrollment grew by a modest 4.8% (17,258 participants) during the same period.
The FY2025 fiscal gap, while negative, is less concerning than it may appear. Growth in Human Services, and Transportation partly reflects Illinois drawing down remaining federal pandemic relief funds and the transfer of excess funds from the income tax refund fund—temporary dynamics rather than a structural imbalance. Partially offsetting expenditure increases, Debt Service fell 14.24% and Local Government Revenue Sharing declined 6.35%.
Based on this analysis, Illinois’ FY2025 spending and revenue were approximately balanced after accounting for the spenddown of Covid-era funds and the transfer of excess funds from the income tax refund fund. Going forward, Medicaid’s long-term trajectory, slow growth in sales tax revenues, and federal funding uncertainty represent the most significant fiscal risks to monitor.
