EXTRA SESSION: Lawmakers eying $41 billion budget with $5 billion in borrowing
Sen. Andy Manar, D-Bunker Hill, delivers his remarks during debate on the Senate floor at the Illinois State Capitol on Friday in Springfield. (Pool photo by Justin L. Fowler/State Journal-Register)
House and Senate adjourn, will continue their work on Saturday
By PETER HANCOCK
Capitol News Illinois
SPRINGFIELD – Illinois lawmakers worked into the evening Friday and will return Saturday in hopes of passing a budget for the upcoming fiscal year.
Sen. Andy Manar, D-Bunker Hill, one of the Senate’s lead budget negotiators, said the package will look similar to the current year’s budget of a little more than $41 billion, although it will rely on borrowing up to $5 billion from the Federal Reserve to make up for a sharp loss in revenue caused by the COVID-19 pandemic.
The plan is to pay that money back with federal aid to states that lawmakers expect Congress to approve soon.
It also sets up a special new fund called the Coronavirus Urgent Remediation Emergency, or CURE, Fund to receive federal aid that has already been appropriated, as well as any additional federal aid that Congress approves for states in the future.
“That is the largest, most profound moving part that we’ve been attempting to get our hands around now for several weeks,” Manar said. “We are still learning about the (federal) CARES Act, even though it was passed, I think, well over a month ago at this point.”
Both chambers passed Senate Bill 2099 Friday with two amendments to set up the borrowing program. It authorizes the state to borrow up to $5 billion on a short-term basis through the Fed’s Municipal Liquidity Facility, a program through which the central bank will buy the debt of state and local governments that need to borrow in order to fill in revenue holes.
Because it is a borrowing bill, it required a three-fifths supermajority in both chambers to pass – 71 votes in the House and 36 in the Senate. It received exactly 71 votes in the House and 37 in the Senate.
Speaking during a committee meeting Friday morning, Rep. Michael Zalewski, D-Riverside, responded to criticism from Republicans that the state will be charged 3.8 percent interest on the loan due to its poor credit rating.
“I think everyone is paying a premium, given the coronavirus, but you’re right. Our bond rating is not helpful in this situation,” he said.
House Democratic Leader Gregory Harris, of Chicago, outlined the budget during a committee meeting Friday, saying it was “the best of a bunch of bad options.”
Other options, he said, included cutting state spending across the board by roughly 35 percent, reflecting the drop-off in revenue the state expects to see, or simply passing a “lump sum” budget and giving Gov. JB Pritzker emergency authority to decide how to spend it.
But even with the $5 billion in borrowing, Harris said, the proposed budget is still full of uncertainty, including the possibility of even further revenue shortfalls if the COVID-19 pandemic resurges in the fall, along with the flu, thus preventing lawmakers from returning in November for their annual veto session.
“We’re dealing with a time of unprecedented crisis for our state, both human and financial, and being in this situation is leaving the state of Illinois, along with businesses and families, with really difficult choices,” he said.
During debate on the Senate floor over the borrowing bill, Sen. Dale Righter, R-Mattoon, warned about the possibility that Congress might not pass a stimulus bill for states, or that the bill might not be as large as lawmakers hope.
“Will you be prepared to wade into the General Fund budget and make the reductions that are necessary in order to pay the additional debt service?” he asked.
But Senate President Don Harmon, D-Oak Park, argued it would be counterproductive for the state to cut back on spending during an economic crisis.
“This is the economic theory in execution that got the country through the Great Depression,” he said. “This is the time when government should be spending when others can’t. We can keep the wheels turning, and the people who depend upon the services the state offers and for the state to participate in the economy in a way that keeps money moving and people employed.”
The budget is contained in Senate Bill 264, House Floor Amendment 1. The House was expected to vote on the bill Saturday morning. Senate action would follow.
The special session of the General Assembly was scheduled to last only three days, but House Speaker Michael Madigan, D-Chicago, announced Friday that lawmakers would need at least one more day to complete their work. Both the House and the Senate are scheduled to reconvene at 10 a.m. Saturday.
Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.