The COVID-19 pandemic has had a devastating impact on state budgets, with tax revenue shortfalls estimated to total about $200 billion for fiscal years 2020 and 2021 compared with initial projections.[1] What actions are states taking to deal with these financial losses? Illinois’ FY2021 budget relies on borrowing to close a $6.6 billion deficit. However, Governor J.B. Pritzker hopes to avoid most of the borrowing if Congress can be persuaded to provide states with sufficient funding to offset…
In March Congress passed the $2.2 trillion CARES Act, the third federal coronavirus relief act, which among many other things provided $13.2 billion in funding to K-12 schools across the country.[1] The funding can be spent on programs and coronavirus response including: Technological support for remote learning; Cleaning schools; Providing meals; and Services and outreach for low income and higher need students such as English language learners and students with disabilities and mental…
On June 26, 2020, Cook County Board President Toni Preckwinkle issued a preliminary budget forecast for fiscal year 2021, which begins December 1, 2020 and ends November 30, 2021. The report provides end-of-year estimates for the current 2020 fiscal year and a forecast for the 2021 fiscal year in the County’s operating funds: the General Fund, which accounts for administrative and public safety operations; and Health Fund, which accounts for the health and hospitals system run by the County.…
City Colleges of Chicago released its tentative FY2021 operating and capital budgets on June 23, 2020. The total budget is proposed to be $441.0 million. This a 1.5%, or $6.6 million decrease from the FY2020 budget of $447.6 million. This blog presents highlights of the City Colleges FY2021 $29.0 million capital budget program and its long-term liabilities. City Colleges prepares a capital budget at the same time as the operating budget. This is usually part of a comprehensive five-year…
Since the federal government provided $139 billion of coronavirus relief funds to states and large cities and counties in April, smaller localities have been waiting to receive some of the money. Now large governments, including Cook County, are taking steps to share the funds. On July 8, Illinois’ biggest county announced plans to distribute about $51 million to local governments beginning as soon as later this month. That represents about 12% of the $429 million allocated to Cook County from…
In the wake of protests over the deaths of George Floyd and other Black Americans at the hands of police officers, police accountability and reform has risen to the forefront in government discussions, and residents in many cities have called for defunding the police. The defund-the-police movement has called into question the best use of budget resources and whether some issues often handled by police would be better served through community services. The Minneapolis City Council passed a…
When Illinois lawmakers met in Springfield to pass a budget for the upcoming fiscal year, the main issue they confronted was the tax shortfall caused by COVID-19. They did not want to include revenue from a proposed graduated income tax, which will only be available if voters approve the plan in November 2020. Instead, the $43 billion budget passed on May 24 depends on $5 billion in borrowing through a new Federal Reserve program and about $1.2 billion in other debt. While the federal loans…
UPDATE: Since the Civic Federation published this blog post, there have been two significant updates to report, as detailed in this follow-up post. 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…
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…
UPDATE: On May 5, Illinois delayed the planned sale of $1.2 billion of short-term debt as it faces steep interest penalties from investors due to the coronavirus crisis. The sale was tentatively scheduled for May 6, but now the timing will depend on market conditions. Proceeds of the sale are intended to be used to help close the revenue gap described below in the State’s FY2020 budget. Illinois has the lowest credit rating of any state and is poorly positioned to face dramatic revenue declines…
