Building on measures to address the unprecedented economic challenges facing Illinois as a result of the COVID-19 pandemic, Governor JB Pritzker provided an update on the state’s revenue forecast outlook and efforts to provide fiscal stability during these unprecedented times.
COVID-19 has had a profound impact on the U.S. economy, leading to an unexpected loss of revenues across all 50 states, with early projections showing combined state budget deficits of $500 billion over the next two years. 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.
While states are slated to receive federal funding to address costs associated with the pandemic, this funding can not be used for the broader impact on COVID-19 on state revenue. Gov. Pritzker is working with our federal partners and calling on Congress to pass an additional aid package that will provide funding to states to make up for unprecedented nationwide revenue shortfalls.
The Governor announced several steps to address the state’s current fiscal health.
As the costs of fighting COVID-19 continue to grow, the Governor has directed nearly $500 million in additional spending authority to IEMA through the emergency powers granted under the gubernatorial disaster proclamation. Much of this spending is concentrated on obtaining personal protective equipment for our frontline workers and ventilators to treat patients suffering from the most severe cases of COVID-19. 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.
The federal Coronavirus Aid, Relief and Economic Security (CARES) Act is a $2 trillion disaster aid stimulus package that is estimated to provide more than $9 billion to Illinois governments for a variety of programs from education, to aid for seniors and child nutrition to transit systems. It provides $150 billion in direct aid for COVID-19 related expenditures to the states, of which Illinois is expected to receive $4.9 billion – at least $2.7 billion to the state of Illinois directly and up to $2.2 billion to larger local governments.