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Despite Harmon letter, Pritzker has not asked feds for pension aid

Saturday, Apr 18, 2020

* New York Times

Illinois needs more than $40 billion in relief from the federal government because of the coronavirus pandemic — including $10 billion to help bail out its beleaguered pension system, according to a letter the Illinois Senate president sent to members of Congress.

The letter, sent this week by State Senator Don Harmon, also seeks a $15 billion grant to “stabilize the state’s budget,” $9.6 billion in direct aid to Illinois’s cities, $6 billion for the state’s unemployment insurance fund, and hardship money for hospitals and nursing homes, among other things.

The article is somewhat misleading on one point. The $15 billion state budget request is for parts of three fiscal years. From the letter

$15 billion in block grant funding: A flexible block grant would stabilize the state’s operating budget and allow officials here to address unique needs for the current fiscal year, FY2021 and early FY2022. Added flexibility with new federal dollars would also allow the state to assist human service providers serving as the safety net for our most vulnerable population.

* But why Harmon thought to ask for this is just beyond me

$10 billion in pension relief, directly for the state’s retirement systems: Illinois largest liabilities are its unfunded pension liability at $138 billion and other post-employment benefits liability at $54 billion. Illinois law has put the state on a path to fund the pension liability in a manner that is actuarially sound, and the state has been following the payment plan set out in that law. In a normal year the size of those payments crowds out funding for services and programs. Clearly this will not be a normal year and that crowding out effect will be exacerbated by significant revenue losses. I would ask that the federal government: 1. Provide direct cash assistance to the pension systems; or 2. Offer a low interest federal loan to aid Illinois in our efforts to restore and maintain retirement security for public sector workers, many of which are on the frontlines of this pandemic battle.

For those who might say “It never hurts to ask,” yes, it can hurt to ask.

Remember how Republican US Sen. Tom Cotton used just that sort of argument to try and kill federal aid to state and local governments last month?

Dick Durbin represents one of the most bankrupt states in America and the most bankrupt city, Chicago, in America behind those closed doors. They are demanding straight cash bailouts for states and cities that have been fiscally irresponsible for years.

There is a certain strain of wonky politicians who try to “start conversations” without first pausing to ask themselves if publicly sharing those ideas could hurt their own causes.

Illinois created this problem. It’s Illinois’ responsibility to solve it, not the federal government’s. This letter could even hurt all other states’ attempts to convince Congress and the president to back an aid package.

* I asked the governor’s office for comment about the Senate Democrats’ pension ask…

The Governor clearly outlined what he believes our federal partners can do immediately to assist the state earlier this week. We’re working with our congressional delegation, as well as Speaker Pelosi and Leader Schumer, to ensure another aid package includes funds for the state of Illinois and the flexibility to use them in our budget.

OK, but has the governor ever asked for federal help with state pensions?…

No we have not.

* There are some decent ideas in Harmon’s letter, but he’s asking for a lot. For instance

Raise FMAP to 65 percent: Thank you for taking the necessary step in the CARES Act to increase Federal Medical Assistance Percentage to 56.34 percent for the duration of the coronavirus emergency. I ask your consideration of a further increase, taking Illinois to 65 percent, which is a 3.1 percent increase over the level afforded Illinois during the Great Recession. This increase will allow Illinois to continue paying health care providers in a timely manner for the services they deliver to the Medicaid system.

* And is this ask based on actual need? Harmon’s letter doesn’t say

$6 billion in direct aid to the state’s unemployment trust fund

Another diplomatic statement from the governor’s press secretary…

Just like states around the country, Illinois is seeing an unprecedented number of unemployment claims. We’re working with our federal partners to ensure our program remains strong and we welcome any additional funding for our trust fund.

- Posted by Rich Miller        

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