Pritzker: Deep cuts without federal aid
SPRINGFIELD – Gov. J.B. Pritzker said Monday that Illinois faces the prospect of having to make deep spending cuts over the rest of the fiscal year if Congress does not pass an economic relief package that helps states make up for the massive loss in revenue they’ve seen since the start of the COVID-19 pandemic.
“I continue to do my part to make calls, to make sure that people understand that Republican-led states and Democratic-led states all have this challenge of revenues that fell off a cliff because of COVID-19,” Pritzker said during a news conference in Springfield.
COVID-19 first appeared in Illinois in January and it quickly spread to all corners of the state, prompting Pritzker to issue a stay-athome order that virtually shut down major segments of the economy. Similar economic restrictions were imposed in other states as well, although many were less strict than those in Illinois.
As a result, base revenues flowing into state coffers fell during the fiscal year that ended June 30 by a little more than $1.1 billion.
In May, state lawmakers passed a budget for the new fiscal year that began July 1. That budget was roughly $5 billion out of balance compared to revenue estimates available at the time, but the plan was to fill in the gap by borrowing from the Federal Reserve and by passage of a proposed constitutional amendment to allow the state to levy a “graduated” income tax that would impose higher tax rates on higher levels of income.
The budget authorized borrowing roughly $4.5 billion through the Federal Reserve’s Municipal Liquidity Facility, something the Fed board approved earlier this year as a way to help state and large local governments make up for the loss of revenue they’ve seen.
In Illinois, the plan was to borrow that money and pay it back with aid that lawmakers expected Congress to approve.
Republicans in the General Assembly argued against that plan, saying it would be unwise to rely on short-term borrowing to balance the budget, especially when it was still unknown what, if any, kind of relief package Congress would authorize in the future.