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A grim forecast for Illinois’ new fiscal year

Illinois Comptroller Susana Mendoza speaks to the media in the state Capitol on November 8, 2017.

(The Center Square) – Illinois Comptroller Susana Mendoza said that the COVID-19 shutdown this spring has had a significant impact on tax revenues that the state needs to operate.

The pandemic health crisis has also hit Illinois with several billion dollars in emergency expenses, she told the State Journal-Register.

Mark Glennon, executive editor of the state budget watchdog group Wirepoints, said Illinois budgets are typically in the hole for $1 billion to $2 billion. Because of the COVID-19 crisis, the deficit for the new fiscal year will be $6 billion to $8 billion, he said.

The first thing Illinois needs to do is to start to cut spending, Glennon said. Other states, including ones with Democratic governors, are laying off workers and cutting payroll as a result of COVID-19’s economic impact.

Illinois, on the other hand, awarded state workers a pay raise on July 1. The raises were negotiated before the pandemic and Gov. J.B. Pritzker has said they were necessary after some union employees went without a contract during former Gov. Bruce Rauner’s term.

“It is truly astonishing,” Glennon said.

In her interview with the State Journal-Register, Mendoza said that before the spring shutdown and quarantine, “Illinois was in relatively good shape, with a nominally balanced budget in place and revenues coming in greater than expected.”

Glennon disagreed. He said yearly losses from the state pension programs are not factored into the calculation. He said that before the COVID-19 crisis, losses from Illinois’ pension funds have been costing the state as much as $10 billion every year for a number of years now.

Glennon said that Illinois does not even make “tread-water” payments into the pension systems. He said the situation is “untenable.”

Wirepoints has been pushing for a constitutional amendment to the state constitution that would modify the pension protection clause to allow for reform in the Illinois pension programs.

“The lion’s share of our problems is pensions,” Glennon said.

Mendoza told the State Journal-Register that she hopes Congress will pass significant emergency funding in the form of “no strings attached” grants to help states make it through the COVID-19 crisis.

Glennon said Illinois needs to do its part, by making dramatic cuts in state and municipal spending. One option Glennon would like to see on the table is bankruptcy for poorly performing municipalities. Many other states, including California and Michigan, allow bankruptcy as an option for the “worst off” of municipalities. Illinois does not offer bankruptcy as an option for municipalities, Glennon said.

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