Illinois agencies must identify spending reductions and create reserves in their budgets to prepare for an economic downturn, according to an executive order issued Tuesday by Gov. JB Pritzker.

Pritzker said the order is designed to combat federal policies by the Trump administration that are likely to increase costs on the state and put pressure on the economy. The latest order requires most state agencies to, within 30 days, “identify immediate spending reductions, including efficiencies that will result in reduced spending.”

Pritzker also directed the agencies to reserve 4% of fiscal 2026 general fund appropriations. Lawmakers approved a $55.1 billion spending plan, meaning the order could halt up to $2.2 billion in approved spending in anticipation of state revenue declining.

Some state agencies, such as the Illinois State Board of Education and the state’s pension systems, are not subject to the order to identify spending cuts.

Pritzker also ordered agencies that find budget shortfalls to identify lines in their budgets that can be reduced. The order also directed agencies to pause nonessential purchases and travel.

“It’s a beginning of dealing with what we think could be a very severe challenge for the state budget this year,” Pritzker told reporters in Joliet. “Remember, we can only identify what we know. Here’s something that I’m very concerned about, which is that the budget is affected vastly by the economic situation of the country, and we’re already seeing that states like Iowa are in recession.”

General Assembly Republicans voted against the budget, and House Minority Leader Tony McCombie, R-Savanna, said her party was sounding the alarm about pressure on the state budget before President Donald Trump’s second term.

“We warned that this budget was irresponsible and overspent,” she said in a statement. “Stop passing blame, Governor. Illinoisans aren’t buying that recent policy changes in Washington, D.C., are to blame for the decades of Illinois financial mismanagement.”

Trump-driven fears

Pritzker said Trump’s policies are driving fears about declining revenues.

Pritzker noted the “One Big Beautiful Bill Act,” signed by Trump in July, is at the top of the list because it passes costs for several federal programs down to the states.

Congress, for example, required states to pay a greater portion of administrative and benefits costs for the Supplemental Nutrition Assistance Program. Congress also tightened access to other programs, such as Medicaid, meaning it will be up to states to close funding gaps to allow many people to stay on the program.

The bill also extended tax cuts for businesses and wealthy Americans. The order said much of Illinois’ tax code is tied to the federal tax code and Illinois will see revenue decline because of these tax cuts at the federal level.

The executive order also said tariffs will hurt consumer spending by increasing costs.

“There are hundreds of millions of dollars that are going to have to be made up for as a result of the cuts the federal government is making, including in health care and nutritional assistance, but also across the economy, with the tariffs that are impacting businesses in Illinois,” Pritzker said. “So we think this is a prudent endeavor.”

Legislative Democrats anticipated that federal policies would affect state coffers and established a $100 million BRIDGE fund – short for Budget Reserve for Immediate Disbursements and Governmental Emergencies – with money swept from 57 different funds. Pritzker can tap into that fund “in the event of unanticipated delays in or failures of revenues.”

The state agencies will report their 4% spending reserves and reductions to the governor’s office the same week some agencies must also report on the effects of tariffs.

Pritzker signed another executive order in July that requires seven state agencies to “consider the specific impacts that the U.S. tariffs have had on Illinois and provide draft recommendations of measures to mitigate the impact of these tariffs.”

Economic indicators

Recent economic reports have suggested the economy is struggling. The August jobs report by the Bureau of Labor Statistics found the U.S. added just 22,000 jobs in August and lost 13,000 in June.

Illinois struggled even more in August with the Illinois Department of Employment Security’s preliminary report on job growth showing the state lost 13,300 non-farm jobs last month.

The General Assembly’s independent Commission on Government Forecasting and Accountability reported in early September the state has added just 4,600 jobs on a seasonally adjusted basis since December. Unemployment in Illinois declined to 4.4% in August – continuing a yearlong trend – but COGFA’s report said that’s because the state’s labor force has been shrinking because of “demographic trends” and lower immigration rates.

The state’s general revenues were $37 million higher through the first two months of the fiscal year compared with last year, according to COGFA, but that’s largely thanks to transfer from another state fund. Personal income tax receipts are down 1% and corporate income tax receipts are down 21% so far this year.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.