August 11, 2020 – Congress has yet to agree on another COVID-19 aid package that would free up money for states like Illinois. The problem for Illinois is, state government is banking on that money. It’s still not clear what, if any, additional federal aid Illinois governments will get.
President Donald Trump Friday said one issue that kept the sides apart from a deal was Democrats pushing to bail out poorly run state and local governments. “They wanna be able to make up for many, many years, and in some cases decades of bad management and we can’t do that,” Trump said. “So that’s what they want. They want to do that and we don’t want to do that.”
“The massive taxpayer bailout of badly run blue states,” Trump said Saturday just before signing a variety of executive orders. “We talked about, that’s one of the things they’re looking to do.”
Before talks broke down in Washington, state Treasurer Michael Frerichs said if the federal government doesn’t free up money, there’s going to have to be cuts in state spending.
“When the General Assembly passed the budget, it was contingent upon federal help and the governor said if that federal does not arrive, he will need to make cuts to the budget and that is the governor’s job,” Freirichs said.
Gov. J.B. Pritzker said he’ll have to cut spending if billions in aid isn’t approved and released by the federal government.
Truth In Accounting Research Director Bill Bergman said lawmakers did approve the ability for the state to borrow $5 billion from a Federal Reserve loan program.
“Illinois’ already tapped into that facility to the tune of $1.2 billion, but that’s money that’ll have to be paid back in a year,” Bergman said.
That borrowing was supposed to be covered by $5 billion the state was looking for from the federal government. Bergman said it’s becoming more clear things could get rocky in the next year or so and people should be “battening our hatches and looking at our options.”
There could also be continued costs to state taxpayers from ongoing unemployment benefits. Trump signed an order that continues unemployment with an additional $400 a week, instead of $600. Part of that is supposed to be covered by the states.
In June, the Illinois Department of Employment Security announced it was set to borrow up to $3.8 billion from the federal government through September. The state took five years to pay off $1.4 billion it borrowed to cover unemployment during the Great Recession of 2008.
As to the first month of the fiscal year that started July 1, the Illinois Department of Revenue has posted collections remitted to the comptroller for the month. Revenues are up nearly $2 billion more from the same month the year before.
From all revenue sources, July 2019, which was the first month of fiscal year 2020, there was $3.5 billion reported. Sales and use taxes brought in $1.5 billion, and individual income taxes also brought in $1.5 billion.
For July 2020, the first month of fiscal 2021, there was $5.5 billion reported. Nearly $3 billion came from individual income taxes and $1.4 billion was from sales and use taxes. There’s also nearly $14 million of adult use cannabis tax collections that wenen’t around the year before. Motor fuel tax revenue was up nearly $80 million and cigarette taxes were up nearly $40 million.
