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* 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.”
posted by Rich Miller
Thursday, Mar 24, 22 @ 8:41 am
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I am glad the house Dems passed this bill. I would have rather seen more $$ go towards the unemployment insurance fund, but at least we are paying some of it down. I’m sure the gov had a ton of pressure to spend those dollars, I applaud him for supporting this bill.
Comment by allknowingmasterofraccoondom Thursday, Mar 24, 22 @ 8:49 am
Its interesting how Batinick is calling the College Illinois, employee health insurance and pension payments “pork”.
Comment by the Edge Thursday, Mar 24, 22 @ 8:57 am
More money should have gone to UI fund. It’s like giving a kid 50 for gas and you later find out they spent 30 on gas and 20 on a burger and beers.
Comment by Galway Bay Thursday, Mar 24, 22 @ 9:04 am
==It’s like giving a kid 50 for gas and you later find out they spent 30 on gas and 20 on a burger and beers==
If he went to one of those Willie Wilson gas giveaways, he’d have $50 for beers n brew.
Comment by City Zen Thursday, Mar 24, 22 @ 9:09 am
===Makes an extra payment of $300 million to the state’s pension funds, reducing liabilities over $1 billion===
For a $300 million payment now, reduces liabilities by over 1 billion? With that rate of return it is an area that should be done every year to the extent possible.
Comment by DuPage Thursday, Mar 24, 22 @ 9:11 am
It would be insane to pass any unemployment increase on to employers. Suicide.
Comment by Blue Dog Thursday, Mar 24, 22 @ 9:12 am
While $2.7 bill is a lot of money it’s only around $450 per person employed in Illinois. Spread it over a year and that’s less than $40 per month for the employer to pay. Or $10 over 4 years. Not ideal but not the end of the earth. Especially considering how much businesses and employees received in fed help over the past couple years.
Comment by Been There Thursday, Mar 24, 22 @ 9:16 am
The state has a lot of bills to pay. This compromise, without any Republican support, is another step in governing responsibly, as opposed to the ranting that the opponents seem to excel in.
Comment by PublicServant Thursday, Mar 24, 22 @ 9:17 am
Also glad to see us improving our financial situation, having put ourselves in a better position.
No national Republican voted for ARPA. Why should the party be seriously considered in determining how it’s spent?
“Aurora Mayor and candidate for Governor Richard Irvin”
Aurora is being helped in a huge way via the state capital bill, ARPA and federal infrastructure. Did Mayor Irvin vote for Joe Biden? Did he vote for JB or Rauner?
Comment by Grandson of Man Thursday, Mar 24, 22 @ 9:25 am
After watching the Pritzker dollar bill shredding commercial bragging about how they were no longer wastefully shredding dollars on interest payments thanks to the careful management of our finances, we are now facing an $80 million interest payment this fall and no revenues for the remaining $1.8 billion due to be repaid to the Feds? Time to pull that ad?
Money management, Illinois style. Can’t blame Republicans for that one Mr. Governor.
Of interest are the U.S. Senate confirmation hearings and listening to the nominee extol the virtues of defense lawyers as defenders of the constitution and their important role in the criminal justice system. Listened to a replay last night and almost fell out of my chair. Her message was the exact opposite of the local DPI and Democratic Governors Association arguments against Irvin and those evil defense lawyers.
Time to retool both messages and try to tell Willie Wilson to stop giving away free gasoline? He is all over national as well as local news.
My only question now is will my Republican party fumble those balls right back to the Democrats?
Comment by Louis G Atsaves Thursday, Mar 24, 22 @ 10:13 am
===Her message was the exact opposite of the local DPI and Democratic Governors Association arguments against Irvin and those evil defense lawyers.===
Oh - Louis G Atsaves -
You seem to ignore two important facets to your “comparison”.
1) Governor and sitting on the highest court in the land, deciding cases and considering both the plaintiff, defendant, any and all parties fairly *is* the job, and wanting someone sitting as a justice with experience at a table of a trial is something even you should celebrate… so why Irvin seeming doesn’t want to be one who celebrates his own defense attorney history is something I question, as I also question why Candidate Irvin doesn’t seem to agree much with Mayor Irvin, but I digress.
2) … and it’s part of “1”, why is it that Irvin sees his own history in the law so much from the prosecutory angle, and why is it that he sees his own defense work as not only marginal in scope but “less” in its weight? Is he not proud of his firm and their work?
Comment by Oswego Willy Thursday, Mar 24, 22 @ 11:34 am
Ok, to stop my own digress, to the post,
I’m disappointed that there was no bipartisan solution that ensembles both fiscal strength going forward but a roadmap and plan that the state, not one party or any party, sees as the path with the best political outcome.
That we are here without compromising is a bad signal to voters (we are all taxpayers) and forcing a choice fiscally to be married to either party and weighed by partisan thoughts not fiscal figures.
Comment by Oswego Willy Thursday, Mar 24, 22 @ 11:38 am
– $900 million toward the group health bill backlog likely saving taxpayers $100 million in interest payments –
Shorting group health was always a Madigan-era budgeting “balancing” trick. This wipes out that deficit. I can’t believe that the Springfield-area Republicans whose constituents include the health care providers and the patients seeking the health care are voting against that. This is a massively responsible step forward that primarily benefits Springfield health care industry and the local GOP is taking a pass. It wipes out the backlog. Wow (banned punctuation)
Comment by Leigh John-Ella Thursday, Mar 24, 22 @ 1:44 pm
All states shut down businesses (some more some less). All states paid lots of UI claims. So why was IL’s situation worse? Because we didn’t handle the UI Trust Fund properly BEFORE the pandemic. The UI Trust Fund is meant to be filled with employer tax money. Because employers always won their battles not to pay reasonable rates, the Fund was in bad shape before COVID, and of course COVID made it worse. So it’s quite ridiculous to say that employers should not bear some responsibility. Dems are covering 60 percent of the debt from ARPA, which is more than I would do - darn straight employers should cover the rest and with a smile.
Comment by UI Trust Fund Thursday, Mar 24, 22 @ 2:16 pm
UI Trust Fund has it all wrong….pre Covid the trust fund had a balance of 2.2 BILLION…..please give examples of “employers always won their battles not to pay reasonable rates”. UI Trust Fund, have you ever paid UI rates as an employer or have you just been an employee all your life?
Comment by UI Trust Fund Truth Thursday, Mar 24, 22 @ 2:47 pm
===It’s like giving a kid 50 for gas and you later find out they spent 30 on gas and 20 on a burger and beers.===
That’s a great analogy, also might have been guilty of this a couple times in high school…
Comment by Leeroy Jenkins Thursday, Mar 24, 22 @ 3:21 pm
The Republicans are pretending that the only obligation is the UI Fund. They are assuming the average voter will not be aware of the state’s other obligations.
Comment by Pot calling kettle Thursday, Mar 24, 22 @ 4:43 pm
At least it appears that the UI Fund is not going to be balanced on the backs of state workers and state program cuts.
Comment by NonAFSCMEStateEmployeeFromChatham Friday, Mar 25, 22 @ 7:20 am