* Greg Hinz…

The Illinois House has approved legislation to fill most of a huge hole in the state’s unemployment trust fund with leftover money from the last federal COVID relief bill, the American Recovery Plan Act.

But Springfield Republicans say the figure agreed to in the bill is too stingy and would force a “back-door tax increase.” And with negotiations between labor and business groups over how to refill the remaining $1.7 billion hole at least temporarily stalled, the money will have to come from a combination of tax hikes on employers and benefit cuts for workers, they contend.

The legislative action came Wednesday night on a largely party-line 68-43 roll call, when the House voted to allot $2.7 billion of the state’s remaining $3.5 billion in ARPA funds to fill a $4.5 billion gap in the trust fund that covers unemployment claims within the state. The Senate had passed $2 billion earlier, but called that a placeholder.

A spokesman for Gov. J.B. Pritzker confirmed that he supports the $2.7 billion figure allocated in the legislation, but House GOP leaders and gubernatorial hopeful Richard Irvin charged that the state should allot all $3.5 billion in available ARPA money.

* Dan Petrella and Jeremy Gorner…

Pritzker and the Democratic-controlled General Assembly previously allocated about $4.6 billion from the federal relief plan for a variety of purposes such as grants for hospitals, violence prevention programs and infrastructure projects.

But Republicans, who since last spring have repeatedly criticized the majority party for not addressing the unemployment fund debt in the current year’s $42 billion operating budget, maintained that only about $1.2 billion of the federal relief money has actually been spent, leaving enough money to cover the full debt in the unemployment fund.
[…]

Illinois and a host of other states borrowed from the federal government in the early phase of the pandemic to keep unemployment checks going out to out-of-work residents as businesses shut down, in large part due to Pritzker’s executive orders.

Lawmakers are up against an April 1 deadline to allocate the federal relief dollars to the unemployment fund. If they don’t act by then, rules from the U.S. Treasury Department would prohibit Illinois from reducing the amount or length of unemployment benefits until 2025.

* Jerry Nowicki…

As of Wednesday, the state had already accrued $41 million of interest on the debt at a rate of 1.59 percent. That interest was due to be paid by Sept. 30, according to the U.S. Treasury.

By November, without action, that interest was expected to grow to $80 million, Hoffman said. Interest can’t be paid through ARPA, so it would require a General Revenue Fund allotment, he added. Taking action by November would diminish that amount, he said.

The measure also allocated $898 million to pay off old group health insurance bills, an added $300 million to pension payments beyond statutory levels and $230 million to pay off the unfunded liabilities of the College Illinois savings program – all cornerstones of Gov. JB Pritzker’s debt retirement initiatives put forth in his budget proposal. Those allotments will come from the state’s General Revenue Funds from an anticipated Fiscal Year 2022 surplus.

The pension spending would create $1 billion in savings to the state’s pension system over its life, while the group health insurance payments would save over $100 million in interest and the College Illinois payment would create a $75 million savings, according to estimates from House Democrats.

* Gov. Pritzker…

Illinois is putting our fiscal house in order and paying off our debt. I applaud House Democrats for prioritizing legislation that will use our resources in the most fiscally responsible way: SB2803 will pay down more than $4.1 billion in debt. I especially appreciate the tireless work to dedicate additional revenues to one-time efforts that will produce a stronger budget for years to come, and I extend my gratitude in particular to Leaders Greg Harris, Marcus Evans and Jay Hoffman and Reps. Will Davis, Robyn Gabel, Lisa Hernandez and Michael Zalewski for advancing this priority.

I’m disappointed that Republicans are putting their politics ahead of fiscal responsibility while Democrats in the General Assembly are taking the lead to put our fiscal house in order.

SB 2803 Key Facts

• As amended in the House, SB 2803 accomplishes several key goals the Governor laid out in his State of the State and budget proposal, paying off $4.1 billion in debt:
• Dedicates a substantial amount of remaining ARPA recovery fund dollars to ($2.7 billion) to stabilize the state’s unemployment insurance trust fund, helping small businesses
• Eradicates unfunded liabilities in the College Illinois! program, which has been on the brink of insolvency
• Pays of nearly $900 million in legacy debt for employee health insurance
• Makes an extra payment of $300 million to the state’s pension funds, reducing liabilities over $1 billion

* Rep. Mark Batinick…

In response to the Illinois House’s passage of Senate Bill 2803 on Wednesday night, State Representative Mark Batinick (R-Plainfield) released the following statement:

“House Republicans have had a plan for a year: plug the $4.5 billion hole in our Unemployment Insurance Trust Fund and solve the problem. The plan passed tonight was rushed and only fixes a little over half the problem and spends the rest on Democrat pork projects.

“The reality of the situation is there is still a $1.8 billion shortfall in the Unemployment Insurance Trust Fund that will need to be plugged. How will it be plugged? Either through tax increases on jobs or benefit cuts on people who receive unemployment insurance.

“The fiscally responsible route we could have taken would have been to pass legislation paying off our debt in full to avoid these two consequences. This would have also avoided unnecessary interest penalties and prepared us financially in case there’s another emergency. The legislation passed out of our chamber tonight instead will help fulfill Governor Pritzker’s spending wish list and leave taxpayers on the hook for the remaining balance in the fund.”

* Richard Irvin…

Aurora Mayor and candidate for Governor Richard Irvin released the following statement after the House voted to pass JB Pritzker’s latest tax hike on Illinois families:

“After trying to pass the largest tax hike in our state’s history, the Tax-Hiker-In-Chief is trying once more to tax Illinois families and businesses out of this state. Thanks to his reckless disregard for shoring up the Unemployment Insurance Trust Fund, Illinois employers and workers will have to make up the difference, resulting in billions of dollars in tax increases and benefit cuts. Tonight’s vote is yet another example as to why voters don’t trust Pritzker and Springfield politicians to do anything right, and exactly why we must take our state back.”

Illinois workers will see cuts to their unemployment benefits, and the fund will continue to accrue millions in interest charges. Many other states across the country used federal stimulus funds to repay loans to their unemployment systems, but under Pritzker’s lead, Illinois spent those dollars elsewhere. Despite warnings and urging from lawmakers to utilize federal ARPA money to replenish the fund, he instead willfully chose to use the money for election-year gimmickry and increased state spending that will now result in raising taxes on the residents of Illinois.

They’ll probably just bond it out.

…Adding… Hannah Meisel has a very good story and some great charts…

…Adding… From an exchange with a top Dem…

If we don’t pass a law regarding ARPA funds use for unemployment insurance by the end of the month, the ability to reduce benefits – and use ARPA dollars – comes off the table.

Labor doesn’t want to reduce benefits. But Democrats are advancing legislation to try to make sure the traditional balance used to solve these problems remains viable.

The GOP is going to all vote no, which would have the effect of stringing out the process and likely, ironically, reduce options and put far more dire consequences on business.

…Adding… This is how Speaker Chris Welch is framing the issue for his constituents back home…

House Democrats vote to pay off over $4 billion in debts

On party lines, the Illinois House approved a measure to get the state’s fiscal house in order and pay off over $4 billion in debt. This proposal includes:

• $2.7 billion in the unemployment trust fund that took a serious hit during the coronavirus pandemic
• $300 million in extra pension payments which will yield more than $1 billion in savings
• $900 million toward the group health bill backlog likely saving taxpayers $100 million in interest payments
• $230 million toward the College Illinois program to ensure 25 thousand families have funding for education

“This is exactly what fiscal responsibility looks like,” said Speaker Welch. “It’s disappointing that every Republican voted against paying off our debt, but I’m incredibly proud Democrats are united in building a strong financial future for Illinois.”

…Adding… Sullivan campaign…

Jesse Sullivan, Republican candidate for governor, released the following statement in response to the House passage of SB 2803:

“J.B. Pritzker has never met a tax hike he doesn’t like. And his failure to pursue commonsense budgeting is now costing Illinois families and businesses millions of dollars. The governor could have fixed this problem more than a year ago by using federal aid money to replenish our unemployment insurance trust fund, as more than 30 states have done. Instead, he went on a corrupt spending spree, including $1 billion in capital projects controlled by Democrats. Taxpayers and small businesses deserve better.”

…Adding… The Senate just passed the bill 39-16. From Leader McConchie…

Senate Republican Leader Dan McConchie (R-Hawthorn Woods) issued the following statement after the Illinois Senate passed legislation that failed to fully fund the Unemployment Trust Fund:

“Illinois has long been known for its financial issues, and today’s decision to leave a large hole in the unemployment trust fund is just another example of how Democrats continue to mismanage this state. Despite this payment, Illinois still has the fourth largest deficit in the country and is left with the second largest shortfall in state history. The impact this will have on employers across the state will be devastating. To no fault of their own, they were forced to lay off workers and close their doors, and will now be on the hook to pay for the unemployment costs ensued by the pandemic and the fraud that engulfed the Department of Employment Security. These industries and their workers deserve better, but they were failed today.”