Pritzker talks about $7 billion budget shortfall over next two years
Gov. J.B. Pritzker talked about projected revenue shortfalls due to the COVID-19 pandemic on Wednesday.
In Illinois, general revenue funds are being revised down $2.7 billion in fiscal year 2020 and $4.6 billion in fiscal year 2021. With short-term borrowing to bridge through this crisis, the total shortfall for fiscal year 2021 is $6.2 billion when compared to the spending plan put forth by the Governor in February.
That shortfall expands to $7.4 billion if the constitutional amendment to move to a graduated income tax does not pass.
“You don’t have to be an epidemiologist to see that the virus is going to hit our budget hard, a reality that is being visited upon every state in the United States,” Pritzker said.
Early projections are showing combined state budget deficits of $500 billion across the 50 states over the next two years.
“As a general rule of thumb, state budgets across the United States are dependent upon taxes on income sales and other sources, such as lotteries and gaming for a substantial portion of their state budgets. In every state, the coronavirus pandemic has substantially disrupted those revenue sources,” he said.
“This is a public health crisis, but it is accompanied by massive economic disruption that’s unprecedented in modern history. 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,” Gov. Pritzker said.
FY 2020 estimates by the Illinois Department of Revenue economists show a 7-percent drop in state source revenue. $1 billion of that decline is due to the three-month extension of the April 15 deadline for filing 2019 income tax returns. Because of that extension, those revenues will be received in FY 2021, instead of in FY 2020.
The Comptroller and Treasurer will be moving forward with the issuance of up to $1.2 billion in short-term borrowing to cover the FY 2020 gap due to the tax extension, bringing the FY 2021 budgetary gap for FY 21 is $6.2. billion.
“We will not go without a state budget,” Pritzker said. “We will need to make extraordinarily difficult decisions on top of the difficult decisions that we’ve already made. But together with the state legislature, we will make them. And we will do so with an unswerving dedication to fairness.”
Earlier this month, the Governor’s Office of Management and Budget directed agencies to take all possible steps to manage existing resources for the remainder of fiscal year 2020 by putting on hold all non-essential purchases and operational expenditures, freezing all travel that is not mission essential, and limiting all non-essential hiring. These actions are expected to save at least $25 million for the general funds in fiscal year 2020, according to a press release.
The Comptroller and Treasurer have extended $400 million in investment borrowing agreements that were due to be repaid from the General Revenue Fund in March and April to July 2020.
The Governor has directed nearly $500 million in additional spending authority to IEMA through the emergency powers granted under the gubernatorial disaster proclamation. An estimated $170 million has been expended to date. Federal funding is expected to cover most of the costs the state is incurring in response to the COVID-19 pandemic.
Pritzker called for a second CARES Act to help states cope with the virus.
