* Greg Hinz…
Some details are still in flux, but it looks like lawmakers are settling on a plan as to how to balance the proposed 2021 budget as state finances reel amid the COVID-19 pandemic. The plan: borrowing up to $4.5 billion from a special Federal Reserve program. […]
The borrowing apparently would occur under a Federal Reserve program in which the bank has the authority to lend up to $500 billion to states and municipalities. The U.S. Treasury Department has the authority to cover up to $35 billion in losses, with the loans to have maturities of up to three years.
Officials here hope the borrowing will serve as “sort of a bridge loan,” covering state cash needs until either Washington Republicans relent and agree to boost direct financial aid to state and municipalities or voters this fall enact Gov. J.B. Pritzker’s proposed graduated income tax amendment, one source told me.
With the money, the state will be able to make its full statutory pension payment and avoid major layoffs or cuts in aid to schools and other local governments, multiple sources close to the matter told me.
The idea, I’m told, is that Congress will come through with an aid package and the loan can be paid back quickly. But we’ll see.
* Yvette Shields at the Bond Buyer…
Legislative sources cautioned that the amount of borrowing and the overall budget plans are still fluid and have not been finalized. The state must close a $6 billion to $7 billion gap in the next fiscal year that begins July 1.
Pritzker said he remains hopeful that federal aid will eventually pass Congress and the state won’t have to turn to borrowing.
“We hope not” to fully use the proposed authorization “because there is a state and local funding bill that is working its way through the Congress,” Pritzker said when asked if the state would tap the full $4.5 billion amount during his daily briefing Wednesday on the state’s response to the pandemic. […]
As previously reported by The Bond Buyer, Pritzker’s administration on Friday said the state would submit a notice of interest to potentially tap the program to competitive sell its $1.2 billion of one-year certificates that are on the day-to-day calendar. Under the new program, the state has access to nearly $9.7 billion of MLF borrowing based on its applicable revenues. […]
The debt authorization requires a three-fifths majority of the Illinois Legislature. Pritzker is a Democrat and Democrats hold a three-fifths majority in both chambers.
Senate Democrats were missing three members yesterday, so they’ll still have enough to pass something with a three-fifths majority if everyone sticks around and sticks together and the Republicans refuse to play ball. The House Democrats had four excused absences yesterday, at least one of whom returns today (Rep. Conroy). That’s cutting it awful close.
…Adding… I’m told another HDem will also return today.