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$5.8 billion budget hole to be (mostly) “filled” with borrowed federal money, paid back (hopefully) with federal assistance

Friday, May 22, 2020

* AP

Despite an economy decimated by shutdowns due to the coronavirus pandemic, the Illinois House is poised to consider a $42.64 billion operating budget for next year, a 6.8% increase over current spending that is heavily reliant on federal assistance.

The governor’s stay-at-home order aimed at slowing the spread of the coronavirus left shops closed and more than 1 million Illinois residents out of work. But Democrats who control the General Assembly expect $36.96 billion in revenue for the fiscal year that begins July 1, Majority Leader Greg Harris said. That would leave a $5.8 billion hole lawmakers would look to Washington to fill.

Man, is that ever a dangerous proposition. The cuts the governor will have to make on his own if the feds don’t come through are going to be the ugliest we’ve ever seen, and the courts may order the state to spend anyway, like they did in the Rauner years. True ugliness is on the way if DC doesn’t come through.

Back to the AP

The proposed $42.6 billion in spending outpaces the $39.9 billion outlay approved last spring for the current spending plan, before expected cushioning this week, according to budget documents. But it’s $852 million, or 2%, less than what Pritzker proposed in February, just weeks before COVID-19 prompted him to close nonessential businesses and issue a stay-at-home order. […]

The $7.2 billion in general state funds that would go to K-12 schools for the formula ensures the statewide minimum increase the law requires, but nothing more for individual districts.

* WBEZ

Included in the budget is billions of dollars for coronavirus-related spending, from $600 million for contact tracing and testing, to more than $200 million for small business grants for those forced to close up shop.

Total CARES Act spending for this fiscal year is $2.8 billion and $3.8 billion in FY21.

* Center Square

The budget includes $90 million in increased spending for the State Coronavirus Urgent Remediation Emergency Fund created by a separate bill for the current fiscal year. For fiscal 2021, there is an undetermined appropriation in the Local Coronavirus Urgent Remediation Emergency Fund from the CARES Act.

There’s also $210 million for the Illinois Housing Development Authority to provide COVID-19 relief, which includes emergency rental assistance. […]

For the state’s universities, there’s a total of nearly $1.2 billion, an increase of nearly $1.8 million from the year before. There’s increased spending of $1.4 million for Chicago State University, $120,000 less for Illinois State University, $2,000 less for Southern Illinois University, and half a million more for the University of Illinois. All other universities will have flat funding levels from fiscal 2020. […]

There’s $100 million less for the State Employees’ Group Health Insurance plan than what was in the governor’s proposed budget.

There’s an increase of $16.6 million to the Department of Children and Family Services for expansion of Family Preservation Programs.

Illinois’ veterans homes will get $13.1 million more to cover costs associated with pandemic preparedness.

The Department of Corrections gets $40.1 million more than last year, an increase of 2.7 percent.

The proposed budget also reduces Motor Fuel Tax money to local governments by $31 million.

* Meanwhile

Senate Bill 2099 as amended by the House creates the Coronavirus Urgent Remediation Emergency, or CURE Borrowing Act and authorizes the state to borrow up to $5 billion from the Federal Reserve. The money would be used to cover projected revenue losses for fiscal year 2020, which ends June 30, and fiscal year 2021, which begins July 1.

The measure now heads to the Illinois Senate for concurrence.

$5 billion isn’t $5.8 billion.

As I write this (6:40 pm), the bill is awaiting Senate action.

…Adding… The Senate passed the borrowing bill. From the pool report…

The Senate reconvened at about 6:45 p.m. and Senate President Don Harmon (D-Oak Park) presented and passed SB 2099. The bill creates the Coronavirus Urgent Remediation Emergency Borrowing Act and allows the governor to borrow up to $5 billion through the Municipality Liquidity Facility program through the federal CARES Act to help stabilize the FY21 budget.

“We are not proposing to borrow $5 billion on day one. It is a credit facility, essentially a bridge loan. We will borrow as needed to meet current obligations,” Harmon said.

Senate Republicans were opposed to the measure. Sen. John Curran (R-Downers Grove) and Sen. Sue Rezin (R-Morris) argued that Democrats are rushing the bill and that lawmakers should wait until they actually know how much money they’ll receive from the federal government through the next coronavirus stimulus package. Rezin said “We (Republicans) haven’t even seen the budget yet.”

“I would say this,” Harmon said. “Borrowing is far from optimal but it’s certainly the best option among the bad options we have. This is the time the government should be spending — when others can’t.”

SB 2099 passed 37-19.

- Posted by Rich Miller        

20 Comments »
  1. - Token Conservative - Friday, May 22, 20 @ 6:55 pm:

    This budget is a complete disgrace to the fiduciary responsibility of the state legislature. Increasing spending 7% and (hoping to) borrow billions from the Fed isn’t legislating, it’s being afraid to do the right thing.


  2. - RNUG - Friday, May 22, 20 @ 7:09 pm:

    == There’s $100 million less for the State Employees’ Group Health Insurance plan than what was in the governor’s proposed budget. ==

    Time honored budget trick. Borrowing from the State Employers again; will mean longer waits for payments to vendors and reimbursements to employees / retirees.


  3. - RNUG - Friday, May 22, 20 @ 7:10 pm:

    == The proposed budget also reduces Motor Fuel Tax money to local governments by $31 million. ==

    Another time honored budget trick.


  4. - Jvslp - Friday, May 22, 20 @ 7:10 pm:

    What’s 800 million dollars between friends.


  5. - RNUG - Friday, May 22, 20 @ 7:13 pm:

    Borrowing $5B was pretty much anticipated when the budget was introduced. At least this way the interest should be less.


  6. - Captain Obvious - Friday, May 22, 20 @ 7:35 pm:

    Irresponsible does not even come close to describing this budget. Although the overly optimistic revenue projections, if combined with a lack of federal help, may finally force the state into some form of fiscal responsibility. It is unfortunate that responsibility will manifest itself in deep, painful, and sudden budget cuts.


  7. - Blake - Friday, May 22, 20 @ 8:01 pm:

    I have to add to the negativity about this budget. There is a reason for the saying “don’t count your chickens before they hatch”. They should pass a budget that would be balanced now, even if they have to pass statutory changes with a sunset for when economic/fiscal times get closer to normal or federal aid comes through.


  8. - XonXoff - Friday, May 22, 20 @ 8:03 pm:

    Thanks for all the long hours, Rich. Whew.

    I’ll play myself out with Bob; “Everything is Broken.”

    https://www.youtube.com/watch?v=Ev-Ru1QpTqU


  9. - Rich Miller - Friday, May 22, 20 @ 8:08 pm:

    ===They should pass a budget that would be balanced now===

    60-30-1.


  10. - Blake - Friday, May 22, 20 @ 8:18 pm:

    ===60-30-1===

    Yes Rich I’m aware & am very open whatever specifics would be most useful for that, but the state doesn’t have the rainy day fund to avoid as you described “a dangerous proposition”.


  11. - thoughts matter - Friday, May 22, 20 @ 8:54 pm:

    Not looking forward to the 2 years behind health insurance claims days again.
    I really think they need to offer cash/ health insurance premium aid/etc. to get the over 60 state employees out the door before late fall when the second virus wave hits. That’s the high risk group. They don’t have to offer extra service time, so the monthly pension wouldn’t increase.
    The salary and future pension savings that would result from replacing senior employees with new tier 2 Employees wouldn’t hurt either.


  12. - Nagidam - Friday, May 22, 20 @ 9:33 pm:

    6.8% increase in this budget is comical. With prayerful borrowing to boot. The day after the progressive income tax fails the bond house declare us junk status if they don’t before.


  13. - RNUG - Friday, May 22, 20 @ 9:35 pm:

    == The salary and future pension savings that would result from replacing senior employees with new tier 2 Employees wouldn’t hurt either. ==

    1) Admittedly, the 2002 ERI was overly generous and cost the State money instead of saving money. Ditto for the less generous 2004 offering.

    2) It is highly likely any 60 year old State employees taking an “early out” ALREADY have 20 years of service and ALREADY qualify for the premium free health insurance, so there will be zero savings there.

    3) Yes, it will stop the accumulation of Tier 1 retirement credits … but it also creates a drain on the SERS person fund a number of years sooner than current models may expect.

    4) If you replace staff, you may get cheaper but less trained staff, so the salary expenditure may be less but productive will probably go fown … so work result per hour may actually be less than today. So all an ERI mostly does is shift the existing salary off of GRF and into SERS. GRF personnel funding will be less, but overall State funds (GRF + SERS) expended will actually be higher.

    In other words, we’ve been down this road before. Take any saving projections with a whole shaker of salt and a couple of gallons of tequila.


  14. - Oswego Willy - Friday, May 22, 20 @ 10:18 pm:

    First, what - RNUG - said.

    To the post,

    The thing about the budgeting here, the planning with this budget, the monies, the hope, the duct tape, band-aids, and a prayer…

    It’s as though the process itself knows it’s in trauma. The trauma has me in shock, hoping to recover long enough to understand this all…

    Then add in the House in a convention hall.

    It’s so surreal.


  15. - thoughts matter - Friday, May 22, 20 @ 10:28 pm:

    RNUG - I can’t argue with most of your point except one. But could you just let me hope for a few minutes?

    The one point I can argue about is that I am over 60 and I do not have 20 years in. I came to the public sector ‘late in life’. I also personally know of others In the same situation.
    Maybe the state could offer cash or a monthly insurance reimbursement until the age of 65.


  16. - Nagidam - Saturday, May 23, 20 @ 7:30 am:

    I really enjoy and have enjoyed RNUGs insight on pensions.

    Thank you.

    I woke up and read some more and the only conclusion i have is that State Legislators are playing a form of monopoly. It’s all play money with no repercussions.


  17. - RNUG - Saturday, May 23, 20 @ 8:43 am:

    == The one point I can argue about is that I am over 60 and I do not have 20 years in ==

    You will still be entitled to have a portion of your health insurance paid for by the State. It is a sliding scale between 8 years of service with 50% paid by the State and 20 years with 100% paid by the State. At 50%, it isn’t great but in most cases still better than getting health insurance on your own.


  18. - Chappy - Saturday, May 23, 20 @ 8:48 am:

    Why do we continue to see IDOC’s budget increase? We have decreased the inmate population by more than 13000 shouldn’t spending be less?


  19. - Generic Drone - Saturday, May 23, 20 @ 9:19 am:

    Looks like we may get to see a reduction of state services that all those state employee bashes were hoping for.


  20. - thoughts matter - Saturday, May 23, 20 @ 12:05 pm:

    I know I will get about two thirds of my health insurance paid. I’m just making suggestions of things that could incentivize retirement without increasing the monthly pension amount for the length of the life of the retirees. The same way as the current special retirement options hand over a bunch of cash to reduce the annual increase or to drop out of the fund( for inactive participants). My suggestions ( and anyone else’s ) would amount to a smaller amount of money overall than those two and could be offered in addition( but not tied to) the one that reduces the 3% increase increase Compounded to 1.5% simple.


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* Reader comments closed for the weekend
* Pritzker thanks Dr. Ezike, extends financial protections, points to progress, says no more daily COVID-19 briefings - Calls Trump tweets "reprehensible" - "I want to send my condolences to the family of George Floyd, and also to every African American in this country" - Defends budget decisions - Credits Illinoisans for progress against virus - No bill signing ceremonies - Hopes testing progress continues - "It seems as if President Trump is withdrawing us from the rest of the world" - No out of state travel plans - Talks contact tracing - Asks Illinoisans to be careful during reopening - Will sign Medicare for undocumented seniors bill - Refuses to criticize Lightfoot for Trump comments - Talks about difficulties in securing testing locations - Dr. Ezike and Pritzker respond to question about what they've learned about themselves and leadership - "We're no longer in a stay at home order"
* 1,622 new cases, 86 additional deaths
* *** UPDATED x1 *** What in the heck is going on in Rockford?
* COVID-19 roundup
* All metro areas reporting record high unemployment rates
* School seclusion and restraint bill derailed after opposition
* Attorney DeVore asks appellate court to dissolve another TRO
* Question of the day
* Madigan issues new guidance to members, staff
* Architects abandon alternative reopening plan
* SUBSCRIBERS ONLY - Supplement to today’s edition
* House of worship attendance limit expected to be removed from stay at home order
* Open thread
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* *** LIVE COVERAGE ***
* Sheriffs file suit against state for refusing to accept jail transfers
* Pritzker says IDPH has offered "suggestions" to churches - Says he's received "pushback" from some private nursing homes - IDPH will file new rule on nursing homes - Still looking at what to do about IDPH rule - Dodges question about Willie Wilson - Employers should use "common decency" when bring workers back - Will wait on feds before making any more budget decisions - Central Illinois hospitalization numbers improve - "We might potentially have to move backwards in the phases - "Not our intention" to make changes to Phase 4 guidance - No plans to dine at restaurant this weekend - No decision about ending daily briefing - Repeats that he has never encouraged police enforcement - Suggests GOP demand for IDES audit could be a "political move" - Still pondering school reopening - All testing is free - Asked about dangers of Legionella in large buildings - Testing and tracing metrics are "internal goals" - Points to federal rules on unemployment and workers who refuse to return - "Difficult for us to open theaters in the near future" - Dr. Ezike talks rules for malls - Dr. Ezike monitoring outbreak at county jail with ICE detainees
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