Pritzker’s plan to use federal tax money to pay debt hits snag

Federal guidance for billions in COVID-19 relief prohibits use for debt service

[May 12, 2021]  By Greg Bishop

(The Center Square) – Federal guidance about how federal taxpayer funds for COVID-19 relief to state and local governments can be used could put a damper on Gov. J.B. Pritzker's plan to use it to pay off debts.

The Biden administration released their guidance on the funds.

Illinois is expecting to get more than $13 billion. More than $5 billion will be shared among local governments throughout the state.

“Looks like closer to $8 billion [for the state],” said state Rep. Mike Zalewski, D-Riverside. “That’s the good news. The [unresolved] news is that we very much are still in a position of trying to sort out what it means … working towards figuring out what it can be used for.”

Pritzker said Tuesday the state needs to pay its debts.

“The debts that we racked up during the COVID year of 2020, we had to do some federal borrowing in order to cover our bills,” Pritzker said. “We also racked up a bunch of bills, a bill backlog, that needs to be paid back. We need to act responsibly with these dollars.”

The federal guidance released this week lays out a variety of things the money can be used for, including covering payroll for essential workers and even paying a premium, among other costs. But, the guidance says "payments from the Fiscal Recovery Funds are intended to be used prospectively and the Interim Final Rule precludes use of these funds to cover the costs of debt incurred prior to March 3, 2021."

State Sen. Chapin Rose, R-Mahomet, said that puts a kink in Pritzker plan “to use all these Biden bucks to bail himself out of his mess that he and the Democrat supermajorities made last year when they approved a budget that was billions of dollars in the hole and then just went home.”

Rose said the definition of debt service is an $8 billion question for Illinois right now.

“I bet you a dime to dollar someone in the second floor [where the governor’s office is in the state capitol] fiercely calling [U.S. Sen.] Dick Durbin right now trying to get him to give us a definition of debt service,” Rose said.

The Illinois Comptroller’s office said they continue to review the interim guidance for what’s allowed and plan to provide comment.

“[Governor’s Office of Management and Budget] and our office will be seeking to clarify with the Treasury that guidance against using these funds to pay debts unrelated to COVID-19 does not prevent their use for paying debts accrued for spending related to COVID expenses,” a spokesperson for Comptroller Susana Mendoza said in a statement. “Our office has made clear that stimulus funds will not be used to pay legacy costs such as pensions.”

Rose was critical of any changes to the guidance happening in time for a key budget deadline.

“I think in the last round they issued a number of guidances, so yes,” Rose said. “The question is can it change before May 31, when it needs to change by for Illinois purposes.”

Half of the federal funds for state and local governments will be released this year. The other half will be released next year.

Zalewski said they’re continuing to review the guidance as budget talks continue.

“I think we still have to be cautious and conservative,” Zalewski said. “I think we still have to engage our GOP colleagues, and I think we still have to produce a budget that lives within our means.”

Closed-door bipartisan working groups and appropriations committees continue to work on details of how to spend more than $42 billion. They’ll also determine how to spend nearly $8 billion in federal relief.