As published in the Chicago Tribune
The U.S. Senate will soon vote on the latest in a series of pandemic financial relief bills — this time a $1.9 trillion effort that includes stimulus checks for individuals, increased unemployment benefits, business aid, school funding and a whopping $350 billion for state and local governments.
Under this plan, Illinois would receive a total of $13.2 billion, with $7.5 billion for the state and $5.7 billion for cities and counties. Those numbers have some Illinois politicians salivating at the idea that federal bailout money means we can avoid tough budgetary choices and paper over our long-running problems. But the reality is, families and businesses in Illinois have been hit far harder by COVID-19 than state government has. We must prioritize aid to the people of Illinois over a bailout of our bureaucracy. And we should work to reduce state government spending, just as every family, business and organization has found it necessary to do during the pandemic.
In 2019, the Pritzker administration asked department directors and agency heads to come up with a plan to reduce their spending by 6.5% — only to never share those plans with the legislature or the public. Again in 2020, the Pritzker administration asked agencies to identify 5% in cost reductions but true to form never shared those plans either. Thankfully, state revenues continue to significantly exceed our original pessimistic pandemic forecasts. But while those improved revenues — and the billions in federal aid we’ll receive — will help us avoid draconian cuts, they should not be used to further cement our systemic overspending.
The state’s share of these new federal funds should be used for three key purposes: to deliver financial support to Illinois families and businesses, to pay off short-term debt and to reduce our backlog of unpaid bills.
First, both state and local governments should refill and reopen small-business grant programs that have to date only provided assistance to a fraction of the businesses that have been dealt a blow from COVID-19-related closures and restrictions. The highly touted Business Interruption Grant program, for example, awarded grants to just 20% of the businesses that applied. Many businesses are also struggling to pay their crushingly high property tax bills from a year in which they may have seen their property closed or restricted a majority of the time — a property tax relief program could go a long way in reducing that burden. And further mortgage and rental assistance to families who have seen their income drop because of COVID-19 closures would help reduce foreclosures and housing insecurity.
Second, the current state budget relies heavily on borrowing more than $3 billion from the Federal Reserve. All of that is due to be repaid within the next 2½ years. Carrying a short-term debt load like that will put further strain on the state budget, even after the pandemic. An influx of federal aid should be used to immediately pay off that short-term debt and avoid a repayment problem that is right around the corner.
Third, Illinois is notorious for carrying billions of dollars in unpaid bills. By paying our bills and reducing the current $5 billion backlog, we put cash in the pockets of Illinois service providers and vendors who are waiting to be paid — and we also reduce our overall debt load. As businesses fight to stay afloat during the pandemic, we shouldn’t add to their problems by making them wait and wait for the state to pay its bills. Further, when the state pays Medicaid bills — which is one of the largest programs in the state budget — we get matching funds from the federal government. During the pandemic, the matching rate has been temporarily enhanced for all states, meaning that Illinois can stretch every dollar even further.
If we use the federal money as a magic budget bailout, we’ll find ourselves right back in the crumbling condition Illinoisans have known for far too long. But if Illinois pursues a strategy of passing relief dollars directly to families and businesses, paying off short-term debt and implementing spending reductions from state agencies, we will have improved the likelihood that our state can reemerge from the pandemic on a more stable footing than any time in recent decades.
State Rep. Tom Demmer (R-Dixon) represents the 90th District, which includes portions of Lee, Ogle, DeKalb and LaSalle Counties.