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Illinois should aim to build up a now $1 billion rainy-day fund by more than $2 billion to manage through future economic crises, state Comptroller Susana Mendoza said in pressing for passage this fall of legislation that would funnel more revenue to the once-barren fund.
States on average hold reserves that would allow them to manage for 35 days. Illinois only this year tipped the scales over the $1 billion mark — reaching $1.039 billion — but that equates to just one week worth of operations, Mendoza said.
A target of $3.25 billion would still fall short of the 35-day mark, but Mendoza — whose office manages state bill, debt, and pension payments — said it would provide sufficient cushion to manage paying obligations during future economic downturns.
“Really, that money needs to be there in case of another economic collapse through no fault of our own,” Mendoza said during an address to the Chicago City Club Wednesday. That level would allow the office to reasonably manage bill payments. “I’m not going to feel comfortable until we are at about 7.5% in reserves.”
Comptroller Susana Mendoza told a crowd at The City Club of Chicago that Illinois has cut its backlog of unpaid bills from $16.7 billion in 2017 to just a fraction of that today. […]
She also bragged about Illinois’ rainy day fund.
“It’s about $1.039 billion as compared to the less than $60,000 that I inherited,” Mendoza said. “[But] even a billion-dollars sound like a lot, but that’s a week’s worth of reserves.”
By comparison, Wisconsin’s rainy day fund is nearly four billion-dollars.
* Mendoza also said the $8.3 billion of ARPA federal stimulus was not used to pay down the state’s backlog…
posted by Isabel Miller
Thursday, Sep 15, 22 @ 2:28 pm
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Rainy Day Fund is great, but we’d get “a bigger bang for the buck” if those funds were applied to pensions.
Comment by Anyone Remember Thursday, Sep 15, 22 @ 2:38 pm
Is that Jennifer Banek? Interesting.
Comment by Romeo Thursday, Sep 15, 22 @ 2:44 pm
Wisconsin was long a laggard too, but its rainy day fund around 1.7B, not 4B….that number counts surplus ….
Comment by bond geek Thursday, Sep 15, 22 @ 2:46 pm
Spelunkers gonna spelunk.
I wonder why the Square Circle picked Wisconsin?
Indiana’s rainy day fund is half of what Illinois has built up in the last few years. Missouri has only $385MM.
Comment by Henry Francis Thursday, Sep 15, 22 @ 2:51 pm
Some counties in Illinois are racking up huge budget surpluses. Coles and Clark are two. At the end of fiscal year 2021, Coles had $8.1 and Clark had $9.5 million. County leaders fear the state will cut off funding and people won’t be able to pay property taxes. The good old Eastern block..
Comment by historic66 Thursday, Sep 15, 22 @ 3:00 pm
Really good goal-setting Susana. Thank you.
Others will not be “comfortable” until we lower the $1.8 in the unemployment fund, provide another increase in school funding, and we absolutely need to tackle DCFS. Always a serious balancing challenge as you certainly know.
Comment by Walker Thursday, Sep 15, 22 @ 4:02 pm
=but we’d get “a bigger bang for the buck” if those funds were applied to pensions.=
Maybe, maybe not. The rainy day fund can be used for unforeseen short term liabilities. Pensions are a long term obligation and there’s no reason to believe that the state won’t be able to fund that obligation.
Comment by Pundent Thursday, Sep 15, 22 @ 6:01 pm
Good stuff.
Thank you, Comptroller.
Doing the people’s business, preparing Illinois for tough times, that’s leading.
Comment by Oswego Willy Thursday, Sep 15, 22 @ 6:37 pm