Illinois wants to use federal manna to reduce debt and bills
Illinois expects “reasonable flexibility” for the one-time money that will likely run out in a few years, Hynes said. The governor’s administration plans to work with state lawmakers to spend federal aid to fight the spread of the virus, rebuild the Illinois economy and improve the state’s financial base, he said. declared.
“But we just want to be aware that these will be one-time dollars,” Hynes said. “If we artificially increase spending, it will make our problems and our more difficult challenges worse in our years.”
Like Illinois, governments across the country are trying to develop spending plans for their share of the $ 350 billion in state and local governments allocated in the $ 1.9 trillion relief plan. dollars from President Joe Biden. In neighboring Wisconsin, Gov. Tony Evers, who vetoed a bill to give legislature approval for the use of federal funds, said he plans to use most of the 3 , $ 2 billion that his state should receive to stimulate economic recovery. It plans to channel aid into tourism, infrastructure, broadband access and the statewide pandemic response.
Vermont Gov. Phil Scott has said he wants to use $ 1 billion in federal aid for economic development, climate change mitigation, broadband, water and sewer infrastructure and housing, according to an April 6 press release.
While the coronavirus outbreak has created similar challenges for local governments across the country, Illinois stands out as the only state to seek a loan from the Fed after the interest rates it was facing on the bond market surged last year, in part due to pre-Covid budget issues. 19. Government debt yields reached over 6% for 10-year securities in March 2020, but have since fallen to around 2% as the outlook for the government has improved.
Illinois still pays more than any other state to borrow in the $ 3.9 trillion municipal bond market because of its long-standing budget woes. The state’s unfunded pension liabilities have grown to $ 141 billion, and Pritzker is looking to cut spending and end some corporate tax breaks to balance the state’s budget for the coming year. Investors and analysts say they are watching closely how the state uses future federal aid.