COVID relief: Illinois in line for $7.5 billion in federal aid

The $1.9 trillion coronavirus relief package passed by the U.S. House Wednesday will deliver a long-awaited boost to cash-strapped Illinois, with $7.5 billion in direct aid to the state and $6 billion to Chicago and other local governments.

The aid package, which President Joe Biden is expected to sign into law later this week, is welcome news for a state that has borrowed $3.2 billion from a special Federal Reserve program to help shore up its finances during the pandemic.

The money from the stimulus package comes with few restrictions on how it can be spent, although one constraint is particularly meaningful in Illinois — the state won’t be able to put any of the money toward its $141 billion in unfunded pension liabilities.

“All of the money that’s coming in is very helpful for us both to pay back the debts we had to put on the books because of COVID-19 and to help us to stimulate the economy, to make sure that we’re bringing back the jobs,” Gov. J.B. Pritzker said Wednesday morning in an interview with WBEZ-FM 91.5.

Passage of the federal aid package will kick off debate in Springfield over how the money will spent, with Pritzker and Illinois Comptroller Susana Mendoza among those calling for the state to pay back the Fed and pay down other debts, including the state’s nearly $5.5 billion backlog of unpaid bills.

“Before we spend money on anything else, any stimulus money that comes to Illinois is earmarked to pay back money we borrowed from the Federal Reserve for the state’s COVID and other medical expenses during this pandemic,” Mendoza wrote in a Tuesday op-ed in Crain’s Chicago Business.

“Sometimes legislators hear there’s new money coming and get excited about ways to spend it. That’s why I’ve been so vocal in warning that, ‘No, that money is spoken for,’ “ Mendoza wrote.

But the General Assembly wields the power to appropriate money, giving lawmakers a key role in determining how the federal funds will be spent.

“I look forward to working with the Pritzker administration and our budget leaders on how to best appropriate these funds so they meet the needs of our most vulnerable communities,” House Speaker Emanuel “Chris” Welch said in a statement. “While I know the road to recovery will not be easy, this bill gives us the funds necessary to simultaneously address this health and economic crisis.”

Lawmakers who’ve been helping constituents navigate the state’s overwhelmed unemployment system and other challenges throughout the pandemic will have their say about how best to use the money, said Democratic state Rep. Mike Zalewski of Riverside, chair of the House Revenue and Finance Committee.

“It’s going to be incumbent upon the legislature to have a thoughtful process here and not just cede our appropriations authority to those outside the General Assembly,” Zalewski said.

The beleaguered Department of Employment Security and elementary and secondary education are areas where legislators may look to use some of the federal aid, he said.

Lawmakers on both sides of the aisle have pushed back on Pritzker’s proposal to hold state funding for schools flat in his proposed $41.6 billion spending plan for the budget year that begins July 1. A state law adopted in 2017 set a goal of increasing funding for schools by $350 million annually for 10 years, a bench mark also not met in this year’s budget.

The federal aid package was approved nearly along party lines in Congress, with Republicans objecting to direct aid to state and local governments, among other components. GOP lawmakers characterized that part of the bill as a bailout for poorly managed cities and states and noted that tax revenues in most places rebounded much faster than expected after plunging last spring as the pandemic took hold.

That’s been the case in Illinois, where better-than-anticipated income and sales tax revenue, coupled with borrowing from the Fed, is expected to bring the current $43.4 billion budget into balance.

Aside from the direct aid, Illinois and local governments also are in line to receive billions of dollars in federal funding to assist with reopening schools, continue coronavirus vaccination and testing efforts, and help fund operations and payroll at CTA, Metra and Pace, among other purposes.

U.S. President Joe Biden speaks during an event with the CEOs of Johnson & Johnson and Merck on March 10, 2021, in Washington, D.

U.S. President Joe Biden speaks during an event with the CEOs of Johnson & Johnson and Merck on March 10, 2021, in Washington, D. (Alex Wong / Getty Images)

The package also includes another round of stimulus checks to taxpayers and an extension of additional unemployment benefits, measures that could provide an indirect boost to state and local government coffers through additional sales and income tax revenue.

Roughly one-third of the direct aid to local governments, nearly $2 billion, is headed to the city of Chicago.

At an unrelated news conference Wednesday, Chicago Mayor Lori Lightfoot laughed when asked about the aid and said, “Let’s get the money first.”

Lightfoot said her expectation is the money will come through specific grants with specific requirements and won’t be a “slush fund” to be used however the city wants.

“The devil’s going to be in the details,” Lightfoot said, noting the importance of guidance from the Treasury Department, which also laid out rules for spending the federal coronavirus relief money distributed last year.

Dan Petrella

A Lombard native, Dan Petrella has written for newspapers from Chicago to Carbondale. Before joining the Tribune in 2017, he was Springfield bureau chief for Lee Enterprises newspapers. He’s also been an editor and reporter at The State Journal-Register in Springfield. He is a graduate of the University of Illinois at Urbana-Champaign.

Gregory Pratt

Raised in Little Village, Gregory Pratt covers Mayor Lori Lightfoot and City Hall. Before joining the Tribune in 2013, he worked for the BGA, alt-weeklies in Phoenix and Minneapolis, and Hoy. He has been a finalist for the Livingston and earned other national honors, including from the National Headliner Awards, the Lisagors, and Scripps Howard.

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March 10, 2021 at 05:55PM

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