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Pritzker, Harmon and Welch outline how they want to deal with $7.5 billion federal aid influx

Tuesday, Apr 13, 2021 - Posted by Rich Miller

* From a Crain’s Chicago Business op-ed by Gov. JB Pritzker, Senate President Don Harmon and House Speaker Chris Welch

First, we believe it’s important to pay the remaining $2.5 billion of COVID-related Federal Reserve short term debt, and the unpaid bills and borrowing incurred over the last year that allowed us to protect working families from devastating cuts to our public schools, health care and human services, keeping the lights on in the darkest days of the pandemic. In Illinois, we’re all too familiar with how debt and accrued interest can cripple a state budget. Paying off these bills immediately will avoid interest charges and put us in a stronger fiscal position for the future.

Second, at the heart of our agenda are the working families and everyday Illinoisans who have too often in the past been left out and left behind. That’s why the ARP funds must also be dedicated to spurring job creation and igniting economic growth. Putting people to work and growing our state’s economy means accelerating our infrastructure plans for rebuilding Illinois, supporting small businesses—our greatest job creators—and making sure our educational and health care institutions thrive.

Over the last year, fiscal discipline and a science-based pandemic response has meant that our state economy and fiscal situation are stronger than expected. In fact, over the last month, investors and credit rating agencies have taken a more positive view of Illinois’ fiscal future. That’s an important signal to workers and job creators that Illinois is on a good path toward a firm fiscal foundation.

We need to stay the course by managing our state and federal funds responsibly and we are committed to doing so.

* Greg Hinz has some analysis

The column particularly deals with the $7.5 billion the state expects to receive in one-time funds under President Joe Biden’s $2.9 trillion national plan, which was approved several weeks ago by Congress on a party-line vote.

The governor and legislative leaders make it clear that repaying loans will be the top priority. […]

According to Illinois Comptroller Susana Mendoza, outstanding COVID-related debt includes $2.425 billion still owed to the U.S. Federal Reserve under its Municipal Liquidity Facility borrowing program, $1.043 billion in intrafund borrowing to shore up day-to-day spending in the state’s operating (general funds) account and $400 million in other borrowing. […]

After paying that debt and spending other funds that Congress earmarked for specific purposes, between $1 billion and $1.5 billion will be leftover for the Legislature to spend otherwise, Springfield sources say. And it’s in that area that today’s column offers some hints.

       

7 Comments
  1. - Julian Perez - Tuesday, Apr 13, 21 @ 1:16 pm:

    My understanding is that the State of Illinois is paying about 100 bps less than market for the Federal Reserve loan.

    Why would the State willingly pay it back so soon? Tell the Fed to roll it over, and the state will repay it in a decade.

    I guarantee that the Fed, especially today, will acquiesce


  2. - Cool Papa Bell - Tuesday, Apr 13, 21 @ 1:19 pm:

    What if the last $1.5 billion just went to pensions. What’s the return on that money invested today vs waiting to come up with another billion or two.


  3. - Rich Miller - Tuesday, Apr 13, 21 @ 1:27 pm:

    ===Tell the Fed to roll it over===

    With what magic wand?


  4. - Third Reading - Tuesday, Apr 13, 21 @ 1:49 pm:

    The three Dem leaders unite in calling for fiscal responsibility and the first comment urges them to kick the can down the road.


  5. - cover - Tuesday, Apr 13, 21 @ 1:58 pm:

    = What if the last $1.5 billion just went to pensions. =

    The federal law came with strings attached, the federal fiscal relief for states specifically can’t be used for pensions.


  6. - thechampaignlife - Tuesday, Apr 13, 21 @ 3:58 pm:

    Cut a stimulus check to residents with proof of vaccination, and put this pandemic to rest. That is the best way to reignite our economy.


  7. - Blake - Tuesday, Apr 13, 21 @ 4:20 pm:

    I’m happy to see them putting toward paying bills on time & paying off federal reserve loan since it sounds like they are putting enough to ensure the state no longer pays interest on our bills.


Sorry, comments for this post are now closed.


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