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…
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…
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…
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…
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…
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…
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…
As state and local governments continued to increase the intensity of their responses to the Covid-19 pandemic, this article examined the effect social distancing and business closures could have on state and local budgets. Civic Federation President Laurence Msall noted that the State of Illinois and the City of Chicago were in fiscal distress prior to the pandemic, making them particularly ill-…
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 (…
Throughout the United States there is a bipartisan consensus that too many people are incarcerated. The concerns focus on the impact on inmates’ families and communities, the loss of productive human potential, racial inequities and high financial cost. Despite recent reductions, Illinois still holds nearly 40,000 adults in its prison system, with significant fiscal impact. Illinois spends an…
