In the midst of the coronavirus pandemic, Illinois Governor J.B. Pritzker vows that the state will pass a fiscal year 2021 budget later this year, but it will have to cope with more than $7 billion in general revenue shortfalls as a result of the virus over the next two fiscal years.
“This is a public health crisis, but it is accompanied by massive economic disruption that’s unprecedented in modern history,” Pritzker said. “Illinoisans are all too familiar with the pain the lack of a state budget can cause, so let me just say up front: we will not go without a state budget.”
The governor discussed the changes in revenue projections with top political leaders from both parties, according to a press release sent out from his office. In fiscal year 2020, state officials are projecting a decline of $2.7 billion in general revenue, and another $4.6 billion in general revenue could be lost in FY 2021 as a result of the virus.
In total, the state is facing a budget shortfall of $6.2 billion for FY 2021, according to the governor. If the state’s voters do not pass a “graduated income tax” constitutional amendment this November, the governor says that shortfall could balloon to $7.4 billion.
Pritzker says that state budgets are dependent upon income and sales taxes, as well as other sources such as lotteries and gaming for a substantial portion of their operating funds. The pandemic has “substantially disrupted those revenue sources,” according to the press release.
Get the latest news on COVID vaccines in your inbox. Click here to sign up for our coronavirus newsletter.
The governor put forward a spending plan in February that would have resulted in a balanced budget, but he said that the current COVID-19 pandemic has put a dent in those plans.
While Pritzker wanted the budget to be balanced, he says that he will not lot the pandemic derail the state in the long term.
“This crisis will take us off course for a little while, but we must put ourselves back on track as soon as we can.”
The governor’s office is enacting a series of fiscal programs to help cope with the fiscal pressures the pandemic is placing on state governments.
Earlier this month, the Office of Management and Budget ordered all agencies to manage existing resources for the remainder of this fiscal year. All non-essential purchases and operational expenditures were put on hold, all travel that is not deemed “mission-essential” was frozen, and all non-essential hiring was limited. These moves will save $25 million for general funds in fiscal year 2020, according to the governor’s press release.
The comptroller and treasurer have extended $400 million in investment borrowing agreements, due to be repaid in March and April, to July.
The comptroller and treasurer will move forward with the issuance of up to $1.2 billion in short-term borrowing. According to the governor’s office, that funding will cover shortfalls caused by the decision to extend the April 15 deadline for filing 2019 income tax returns.
The governor has directed $500 million in spending authority to the Illinois Emergency Management Association, and most of that spending is for PPE for frontline workers and ventilators for COVID-19 patients. An estimated $170 million of that money has been spent to date. Federal funding is expected to cover most of those costs.
Even with that funding, Pritzker is calling for a second CARES Act to help states cope with the virus, saying that combined state budgets over the next two years could total $500 billion for all 50 states.