Mendoza touts $82M in savings through early COVID loan payoff

SPRINGFIELD — Taking advantage of more flush state revenues than once projected, Illinois Comptroller Susana Mendoza’s office announced it had made the final payment on a $2 billion federal loan used to cover COVID-19 expenses nearly two years ahead of time.

Paying the $302 million before the loan’s required payback date of December 2023 saves state taxpayers an estimated $82 million in interest, Mendoza’s office said in a news release on Wednesday.

One of two loans from the U.S. Federal Reserve to the state for pandemic expenses, the $2 billion was granted in December of 2020. Roughly $1.8 billion was used on Illinois’ Medicaid bills, and the remaining $200 million was put toward health insurance for state employees.

Mendoza’s office was able to use higherthan-expected state revenues to pay back the loan, under an agreement announced in May by Gov. J.B. Pritzker, Mendoza and Democratic legislative leaders.

Under the plan, the state comptroller would “utilize the state’s revenue overperformance and effective cash management to pay off the debt in its entirety within the next budget year,” according to a news release issued at the time that promised a savings of up to $100 million in interest costs.

“Any bills that accrue interest, we target those first. It’s just a matter of maximizing the revenues that are coming in paying off the right bills first,” said Abdon Pallasch, a Mendoza spokesman. “In this case, it was the revenues coming in better than projected that allowed us to move up our early repayment even more than we’d hoped so as of May.”

Illinois saw an increase of nearly $6.8 billion into the General Revenue Fund in the fiscal year that ended last June, according to a report from the Commission on Government Forecasting and Accountability.

On Thursday, Mendoza’s office also announced the extension of a program that bars unpaid fines being deducted from the state income tax refunds of families who qualify for the Earned Income Tax Credit. The program, which aims to provide relief to low income families during the pandemic, has been extended for a second year.