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FEDERAL STIMULUS PASSES WITH $1,400 FOR MOST ILLINOISANS, $13 B FOR
GOVERNMENT
Illinois Policy Institute/
Patrick Andriesen
President Joe Biden on Friday is expected
to sign the COVID-19 stimulus bill, with direct payments to most
Illinoisans and a significant boost to local and state governments.
Illinois can use this opportunity to fix state finances. |
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 Congressional leaders signed the $1.9 trillion COVID-19 relief
bill March 10, moving Illinois closer to receiving $13.23 billion in federal aid
for state and local governments.
The bill is expected to be signed into law Friday afternoon by President Joe
Biden. It ensures $1,400 in direct payments to most Illinoisians, plus a $7.55
billion bailout for state government and $5.68 billion for local governments.
After facing a $4.8 billion state budget deficit earlier this year, the stimulus
represents a chance for Illinois to prevent further tax increases on overtaxed
residents while protecting government programs for the most vulnerable. The
stimulus is a chance for Gov. J.B. Pritzker to drop his plan for nine new taxes
that will take nearly $1 billion from the Illinois economy
But state leaders could also choose to squander this chance by failing to use
the time offered by this federal lifeline to address the structural spending
that crippled the state’s economy well before COVID-19 impacted it.
The top need is to address Illinois’ $317 billion pension crisis.
Pension spending has grown 533% in the past two decades to consume more than a
quarter of the state budget in 2021. It is expected to increase to nearly 30% of
the state budget in the 2022 fiscal year.
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By comparison, education spending during the past
two decades has only grown by 21% while spending on other government
services, including those that protect vulnerable residents,
decreased by 14%.
Essential services Illinoisans rely on, such as education,
infrastructure and even direct government transfers to low-income
families, have all gone begging as state leaders fed unsustainable
growth in public pensions. Pension debt and other debt has earned
Illinois the worst credit rating in the nation.
Illinois’ high pension costs and debt add a hidden
tax, costing each Illinois resident $1,417 a year. That hidden
pension tax results from diminished economic activity because of
state pension spending, according to research by the Illinois Policy
Institute.
That $1,417 cost per person is more than the $1,400 per person
expected in federal stimulus checks. The stimulus is a single boost,
but Illinoisans can count on pensions costing them $1,417 every
year.
Illinois leaders can choose a better future for the state, but it
starts with pension reform that allows them to curb the future
growth of the five statewide public pension systems. Coupled with
other reforms, Illinois’ economy can recover from COVID-19 and give
the federal stimulus a better chance of working.
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