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* Illinois Policy Institute…
The Volcker Alliance, a non-partisan government watchdog, has issued a new report showing Illinois is at risk of facing a “fiscal cliff” once one-time federal relief funds dry up. That means the state will have to either cut programs or raise revenues to maintain spending that has been enabled by the federal funds, once those funds run out. The report shows Illinois has allocated nearly 60% of its $8.1 billion in State and Local Fiscal Recovery Funds. Only California and Pennsylvania have allocated more of their recovery funds.
* From the Volcker Alliance…
Illinois has a potential for a fiscal cliff if it uses a portion of the SLFRF appropriations or reserves to pay for recurring spending. Its history of using one-time revenue sources to finance recurring needs led to the state’s D average grade, the second-lowest mark, in budget maneuvers for fiscal 2015–19.
So, the Volcker Alliance is essentially warning the state to not do what it did under Bruce Rauner’s administration, which was supported almost wholeheartedly by the… Illinois Policy Institute.
Also, the Volcker Alliance could not point to any hard evidence that Illinois is using federal assistance for ongoing spending. It just figures it is because Rauner.
But it’s true that Illinois needs to watch its spending and conserve cash and not go on any spending binges now, particularly since revenues are indeed expected to decline in the coming years.
* With that in mind, here’s Center Square…
Either remaining federal funds Illinois still holds, or a recently reported windfall in state revenue, should go to pay down the state’s remaining unemployment trust fund debt, a state lawmaker says.
Illinois state government accumulated more than $4 billion in unemployment trust fund debt during the COVID-19 pandemic economic restrictions imposed by the governor. Earlier this year, lawmakers approved using $2.7 billion in federal COVID-19 relief tax funds to pay some of that down. About $1.8 billion remains unpaid.
State Rep. Dan Ugaste, R-Geneva, is calling for a special session so lawmakers can pay off the debt with either remaining federal funds or a recently reported windfall of more than $1.8 billion in state revenue as reported by the Commission on Government Forecasting and Accountability.
Thoughts?
…Adding… Press release…
With the latest $100 million deposit into the Budget Stabilization Fund, the state’s “Rainy Day” Fund, Illinois now has more than $850 million in the bank to weather potential economic turbulence. Governor Pritzker and the General Assembly worked together to ensure the state would have a record $1 billion in the account this fiscal year, and today Comptroller Susana A. Mendoza announced the deposit of $100 million of that commitment.
The improved Budget Stabilization Fund, now at $854 million, is one of the many steps towards financial responsibility that has resulted in six recent credit upgrades for the state.
“I’m thrilled to announce that we’ve deposited an additional $100 million into our state’s Rainy Day Fund,” said Governor JB Pritzker. “This is just one of the ways that we are building long-term financial sustainability—and we are seeing tangible results in real-time. From tax relief for Illinoisans to our six credit rating upgrades, we are creating an Illinois that is economically prosperous for all. I want to thank Comptroller Mendoza for swiftly depositing this funding early in the fiscal year.”
Illinois’ Budget Stabilization Fund had been decimated by budget impasses and mismanagement. At one point the fund held less than $60,000, an amount that would have sustained state operations for less than thirty seconds. Beginning in FY24, state law requires minimum payments of $45 million dollars a year will be required in each state budget to continue stabilizing the fund.
Credit rating agencies pointed to the Budget Stabilization Fund as a key reason for Illinois’ six ratings increases during Gov. Pritzker’s term. S&P Global Ratings and Fitch Ratings both cited the fund’s improvement in their decision to increase its rating, as well as responsible payments to pension funds and up-to-date bill payments. These upgrades allow the state to borrow money at a lower interest rate, saving taxpayer dollars.
The “Rainy Day” Fund, also known as the Budget Stabilization Fund, protects the state services that Illinoisans rely on every day. It is in place to meet state needs in case of deficits or shortcomings in a budget, provide credit stability, and reduce the need for short-term borrowing. Its increased balance offers Illinoisans protection in times of immediate need while building a stable, long-term financial groundwork for the state.
In addition to the recent $100 million deposit and the extra pension fund payments, the Fiscal Year 2023 budget passed by the General Assembly and signed by Governor Pritzker is providing financially responsible relief for Illinois working families. On July 1, residents began to receive over $1.8 billion of tax relief, including tax relief for gas, property, groceries, and school supplies. Direct payments to Illinois families are expected this fall, according to the Comptroller’s office. The budget also made unprecedented investments in college affordability, the Illinois State Police and proven violence prevention programs across the state.
posted by Rich Miller
Wednesday, Jul 13, 22 @ 11:02 am
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Sometimes Center Square exists to push press releases about backbench Republican legislators. This is one of those times.
Comment by Socially DIstant Watcher Wednesday, Jul 13, 22 @ 11:07 am
If you are going to pay down “debt”, doesn’t it make sense to pay down pension debt first?
Haven’t Republicans been ginning up public demand for tackling pension debt for about 20 years now?
I think what they are trying to do is create a competing claim for revenue to prevent pension debt from being paid down, so they can go back to arguing for changes in pension benefits as the only way to reduce pension debt once revenues tighten again.
Because it was never about the debt, it’s always been anti-unionism.
Pretty sneaky if you ask me, someone tell me I am wrong.
Comment by Thomas Paine Wednesday, Jul 13, 22 @ 11:11 am
The Republican who took Steven Andersson’s seat after he whipped votes for the budget and tax increase to payoff Rauner’s $16B general funds payables backlog wants to use that same tax revenue to pay off bills?
“Interesting.”
Comment by Dirty Red Wednesday, Jul 13, 22 @ 11:32 am
How many votes as Rep. Ugaste whipped for this bailout?
Comment by Michelle Flaherty Wednesday, Jul 13, 22 @ 11:38 am
agree 100% pay down that debt, pay down pension debt. Either one.
Comment by Merica Wednesday, Jul 13, 22 @ 11:45 am
I don’t think they know what they’re talking about. As I recall, the Civic Federation looked carefully at the IL budget and concluded that we didn’t use one time Federal Funds for ongoing expenditures. In fact, this budget was singled out for praise because it used one time revenues for one time purposes like paying off debt.
Comment by New Day Wednesday, Jul 13, 22 @ 11:48 am
He is concerned about that debt being collected from businesses in the future from higher UI rates…. Not about the state’s fiscal health.
Comment by Ok Wednesday, Jul 13, 22 @ 11:51 am
Putting aside whether it is a good idea or not - why do we need to call a special session to get it done? If you have the votes, take care of it in veto session.
This rash of “we need a special session” demands seem much more about an election than about policy.
Comment by Montrose Wednesday, Jul 13, 22 @ 12:06 pm
I’m not inherently opposed to using unexpected revenue to pay down debt, but I’d rather have those decisions be made by Comptroller, not legislators. Dollars are fungible. Let’s make sure the highest interest debts are being paid first, regardless of what they were for.
Comment by Homebody Wednesday, Jul 13, 22 @ 12:12 pm
The state kicked in its share. Let business pick up the rest.
Comment by PublicServant Wednesday, Jul 13, 22 @ 12:28 pm
===So, the Volcker Alliance is essentially warning the state to not do what it did under Bruce Rauner’s administration, which was supported almost wholeheartedly by the… Illinois Policy Institute.===
Policy shifts with whom one can make do whatever makes sense to those who can pay IPI?
Comment by Oswego Willy Wednesday, Jul 13, 22 @ 12:30 pm
==Because it was never about the debt, it’s always been anti-unionism.==
Which is kinda weird because they claim to support first responders but this would hurt them.
Comment by Big Dipper Wednesday, Jul 13, 22 @ 12:31 pm
A lot of calling for special sessions. It looks like an Illinois pandemic is spreading.
Comment by Lurker Wednesday, Jul 13, 22 @ 12:39 pm
At least this is the least political reason to call a special session that has been thrown out in recent days.
Comment by JustAThought Wednesday, Jul 13, 22 @ 12:43 pm
” … remaining federal funds … .”. Amount $? Are they “free” or obligated but not spent.
Show your work, please.
Comment by Anyone Remember Wednesday, Jul 13, 22 @ 1:40 pm
Ugaste voted NO on the bill that would pay off $2.7 billlion in the debt that was accrued. Despite business interests supporting the legislation. SMH.
Comment by Opening Date Wednesday, Jul 13, 22 @ 1:51 pm
@ Thomas Paine and New Daybarebspot on. Pay pension debt. ANd the state has demonstrated time and again that stimulus money was used for one offs. BUt I guess if you don’t get the answer you like keep making the statements?
Comment by JS Mill Wednesday, Jul 13, 22 @ 1:52 pm
We had the money to pay off the entire debt. Dems spent it on pork. Now we have another unexpected pile of cash. Why NOT pay this off and avoid a certain tax hike and or benefit cut? Just because its a Republican suggestion, it must be bad?
Comment by How high Wednesday, Jul 13, 22 @ 2:17 pm
==The state kicked in its share. Let business pick up the rest. ==
This would be a coherent argument if all those tens of thousands of Illinois small businesses under indoor service shutdown orders from Mar - May 2020 and Nov 2020 - Mar 2021 had volunteered to be closed and weren’t subject to State orders to do so.
Comment by ChicagoBars Wednesday, Jul 13, 22 @ 2:23 pm
Serious question: What is the process if some of the Federal money isn’t used for the unemployment fund debt? Massive increases in employer UI insurance premiums next year or next couple? What’s the true up period for that current fund imbalance?
Comment by ChicagoBars Wednesday, Jul 13, 22 @ 2:25 pm
===Why NOT pay this off===
It’s a good question.
Comment by Rich Miller Wednesday, Jul 13, 22 @ 2:37 pm
=Dems spent it on pork.=
Please share the “pork” with the class.
Comment by JS Mill Wednesday, Jul 13, 22 @ 3:49 pm