No masking pain coronavirus will inflict on state finances – but no one knows ‘exactly how bad it will be’
The coronavirus pandemic has thrown state government into flux, as the legislative session has been put on pause. And now state officials are scrambling – largely by phone – to try and figure out how to manage Illinois’ already precarious financial situation.
A rainy day fund that one state official says couldn’t fund state government for 30 seconds. An epic budget impasse that devastated state finances. And $134 billion in unfunded pensions liabilities.
And that was before a pandemic crippled Illinois’ – and everyone else’s – economy.
“Clearly the state is in a shaky fiscal condition even prior to the coronavirus scenario presenting itself,” said state Sen. Don DeWitte, R- St. Charles.
And now state officials are scrambling – largely by phone – to try and figure out how to manage Illinois’ already precarious financial situation.
The coronavirus pandemic has thrown state government into flux, as the legislative session has been put on pause. State lawmakers, who have participated in conference calls with budget officials this week, said they are unsure how to proceed as they anticipate a major hit to the Illinois economy.
“Clearly it’s going to be bad. Exactly how bad it will be — that we will find over time,” said state House Majority Leader Greg Harris, D-Chicago.
A state budget report offered different scenarios, saying the pandemic could trigger an economic recession for the state that could lead to $8 billion in lost tax revenue spread out over multiple years for the state’s budget.
While the entire country is feeling the effects of the coronavirus, with mass unemployment caused by social-distancing measures recommended by health experts to slow the spread of the virus, Illinois is in a uniquely poor financial situation some state legislators have admitted.
Illinois is still reeling from years of financial problems.
An over two-year budget impasse ruined much of the state’s finances. The state has$134 billion in unfunded pensions liabilities, a $7.7 billion bill backlog and poor bond ratings from Wall Street’s leading credit rating agencies. State Comptroller Susana Mendoza said Illinois’ rainy day fund has been drained to only $60,000 — not enough reserves in the safety net to run state government for 30 seconds.
“I think it is fair to say we come into this not as well prepared as many other states,” said state Sen. Heather Steans, D-Chicago.
State budget officials said it is too early to estimate the fiscal damage from the virus. Clayton Klenke, executive director of the Illinois Commission on Government Forecasting and Accountability, said the revenues from income and sales tax remain steady, saying there is yet to be a major drop.
“It is so early in the process now that we’re still even showing increases, so there is no way to even quantify what the long-term impact has been,” Klenke said.
Gov. J.B. Pritzker announced Wednesday Illinois would be following the federal government and pushing back its tax filing day three months to July 15. The move will give more time for people to file their taxes, but it will also force state budget officials to wait for clear data on what revenues will be available for the upcoming budget, Klenke said.
State lawmakers said they are relying on federal aid to help alleviate some of the impacts from the virus, but since they don’t know the totality of the economic damage yet, they are unsure of how much federal aid the state would need.
Early Thursday, the U.S. Senate passed a multi-trillion federal aid package that will provide relief to people out of work and to struggling businesses.The aid package will also provide federal funding to states and local governments, with Illinois getting $2.7 billion, according to the National Conference of State Legislatures.
For the Illinois General Assembly, the legislative deadline of May 31 has not changed.
Any vote taken after that date requires a three-fifths majority of both chambers for the law to go into effect within the following 12 months.
Legislators don’t know exactly how the state will go about passing a budget, given the state Legislature has not met since the first week of March and won’t meet again next week.
The social-distancing measures — virtually preventing any large in-person meetings — has made crafting a budget, or any legislation, all that much harder for some lawmakers, with many anticipating the General Assembly will have to go into overtime this session.
“If this continues on for a really long time, do we try to find some way to just focus on a few main bills and making sure budget is a part of that,” said state Rep. Tom Bennett, R-Gibson City. “Or do we find a way to move everything more back into the summer as long we don’t impact certain things — the options are just amazing.”