April 8, 2020
The Civic Federation is examining the fiscal impact of the COVID-19 pandemic on the State of Illinois and its local governemnts. The following are blog posts covering various topics related to the pandemic.
Illinois Governments will Likely Issue More Short-Term Debt to Deal with Revenue Shortfalls Caused by the COVID-19 Pandemic
May 22, 2020
Governments frequently borrow funds on a short-term basis to deal with cash flow problems, and this year, due to the massive economic disruption caused by the COVID-19 pandemic, the State of Illinois and many local governments will face large cash shortfalls as revenue collections are delayed or they fall far below original projections. The State of Illinois has confirmed that it will submit a notice of interest to participate in a special Federal Reserve Bank short-term borrowing facility to help close its FY2020 budget deficit and is proposing to use it for the FY2021 projected budget deficit as well.
May 15, 2020
This blog post is an update to the Civic Federation’s April 9, 2020 blog post: How COVID-19 is Impacting Chicago’s Criminal Justice System and How Public Safety Agencies are Responding.
May 11, 2020
State legislatures across the country are working out how to conduct the people’s business while also maintaining proper social distancing guidelines. According to the National Conference of State Legislatures, legislative chambers in at least 23 states have introduced or adopted bills or resolutions that change rules or procedures in response to COVID-19. Legislatures in at least 14 states have allowed for remote voting or meetings, with new measures being adopted or proposed almost daily. Lawmakers in Wisconsin were already authorized to hold remote meetings during emergencies under a law passed in 2009. Some state constitutions, such as in Alaska and Oregon, require state legislatures to meet in person, meaning a constitutional amendment would be required for remote voting.
May 8, 2020
Revenue estimates presented at the April 29, 2020 meeting of the Cook County Independent Revenue Forecast Commission show the first details on how severe an impact COVID-19 is having on some Cook County tax revenues since Illinois’ stay-at-home order went into effect on March 21. The estimates presented for the month of April 2020 show significant losses in tax revenue related to closures of bars, restaurants and retail, event cancellations and limited travel.
The County has estimated that the total budget shortfall due to loss of tax revenue in the current 2020 fiscal year will be at least $200 million. This revenue loss estimate is for the General Fund only, which accounts for general operations (primarily consisting of administrative functions, property tax administration, and the County’s jail and court operations). These estimates exclude the Health Fund that accounts for operations of Cook County Health, a $2.7 billion operation.
May 4, 2020
When Illinois Governor J.B. Pritzker announced his budget proposal for the upcoming fiscal year in February 2020, the overall economic outlook was cautiously optimistic, with few signs of a recession on the horizon. The Governor’s budget assumed underlying annual growth of slightly more than 3% in income and sales taxes, the State’s largest revenue sources.
But in the past two months, economic disruptions aimed at controlling the coronavirus pandemic have upended financial plans in Illinois and other states and led to projections of dramatic revenue declines and gaping budget shortfalls across the country.
COVID-19 Pandemic Will Have Serious Impact on Finances of Chicago’s Metropolitan Pier and Exposition Authority and the Illinois Sports Facilities Authority
April 24, 2020
The coronavirus pandemic has dealt a severe blow to Chicago’s hospitality industry. Conventions have been cancelled, dine-in restaurants have closed, airport traffic has plunged and sporting events have been cancelled. As of early April, the City had experienced the loss of over 20 conventions and 250,000 hotel bookings related to those events. The coronavirus closures have had an abrupt and serious impact on the hospitality tax revenues used to pay for bonds issued by the Metropolitan Pier and Exposition Authority (MPEA) and the Illinois Sports Facilities Authority in Chicago (ISFA).
Bonds issued by these entities are backed up by pledges from the State of Illinois and the City of Chicago if the primary revenue sources are inadequate. Unfortunately, the negative financial situation across the United States comes at a time when the City of Chicago expects serious revenue shortfalls and the State of Illinois projects a General Funds FY2020 revenue shortfall of $2.7 billion and a FY2021 shortfall of up to $7.4 billion.
Chicago Local Governments’ Executive Orders Provide for Continuance of Government Functions During the COVID-19 Crisis
April 17, 2020
As discussed in a previous blog post, the unprecedented public health emergency brought on by coronavirus has led local governments in Illinois to enact emergency measures and loosen rules related to the Open Meetings Act. Local government bodies have been meeting remotely pursuant to Illinois Governor JB Pritzker’s Executive Order 2020-07 issued on March 16. In the absence of normal meetings and business as usual, and in the interest of keeping government running, the boards and councils that oversee local government bodies in Chicago have temporarily put more authority in the hands of executive leadership and staff, enabling them to make decisions and take actions without going through the normally required approval process.
April 15, 2020
The $2.2 trillion economic relief legislation passed by Congress in late March contains significant new funding for States and large local governments. Exactly how the money will be split appears to have caused considerable confusion in Illinois and elsewhere.
The Coronavirus Aid, Relief and Economic Security (CARES) Act provides a total of $150 billion in federal aid through the Coronavirus Relief Fund. After setting aside $11 billion for tribal governments, U.S. territories and the District of Columbia, the remaining $139 billion is divided among states and local governments based on population. The money can only be used to cover new expenses from March 1 to December 30 of this year to combat COVID-19.
Illinois is expected to receive a total allocation of $4.9 billion. Governor J.B. Pritzker has said the State itself will keep $2.7 billion, with $2.2 billion going to large local governments, and has called on Congress to provide more aid to address revenue shortfalls.
April 13, 2020
Like most states that levy income taxes, Illinois has followed the federal government in extending the deadline for filing and paying income taxes due for 2019 by three months. The extension—from April 15 to July 15—is intended to provide relief to individuals and businesses hit by the economic fallout from the COVID-19 pandemic, but it is also expected to further strain Illinois’ ability to pay its bills.
The Illinois Comptroller’s Office has estimated that more than $1 billion in State revenues could be delayed due to the extension. The Comptroller’s website warns vendors and social service agencies to expect longer payment delays. As of April 13, the State’s backlog of unpaid bills stood at an estimated $8.0 billion.
April 10, 2020
The spread of the COVID-19 virus and the measures put in place to reduce the transmission of the virus have forced states and localities across the country to quickly adjust to a new way of governing. Either through executive-branch action or legislative changes to statutes, states have altered their laws surrounding open meetings in an effort to allow state and local governments to continue to govern transparently while also promoting social distancing.
How COVID-19 is Impacting Chicago’s Criminal Justice System and How Public Safety Agencies are Responding
April 9, 2020
The coronavirus pandemic has had a significant impact on all sectors, including the criminal justice system. How are the public safety agencies in Chicago, Cook County and Illinois responding to the public health emergency?
Cook County Jail
On March 9, the day Illinois Governor JB Pritzker declared a state of emergency, the Cook County Jail had about 5,700 people in jail (“behind the walls”) and another 2,430 people under the Sheriff’s custody on community supervision (electronic monitoring). The vast majority of the jail population consists of people being held pretrial, either because they were ordered to be detained while awaiting trial or because they could not pay their bond.
April 3, 2020
States are currently facing monumental fiscal challenges posed by the economic and revenue impacts of the coronavirus pandemic. However, their ability to use fiscal policies to address these challenges is quite limited due to structural and capacity issues. Only the federal government has the resources and capacity to implement meaningful countercyclical fiscal policies that might mitigate severe economic and fiscal disruption in the states.
This blog post first provides a basic discussion of the monetary and fiscal policies that the federal government can use to stabilize the economy in times of serious disruption, using examples from the Great Recession, before addressing the limitations that states face in implementing fiscal policies in times of economic distress.
March 24, 2020
The coronavirus could have a devastating impact on the State of Illinois’ tax revenues, according to the first official State report that attempts to quantify the fiscal fallout from the crisis.
The new report, from the Illinois General Assembly’s Commission on Government Forecasting and Accountability (COGFA), based its projections on declines in tax revenues experienced during recent recessions. The conclusion: Illinois’ general operating revenues could fall between almost $2 billion and more than $8 billion over several years, depending on the severity of the virus-triggered recession. Before the crisis, COGFA had estimated that General Funds revenue would total $40.6 billion in fiscal year 2021, which begins on July 1, 2020.