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Amid federal funding uncertainty, Illinois lawmakers add ‘safety valve' to state budget
Illinois lawmakers grappling with uncertainty over Trump administration spending cuts tucked a handful of tools aimed at maintaining key programs into the budget package signed by Gov. JB Pritzker earlier this week, including a flexible fund of $100 million the governor can use to cover gaps left by unrealized federal funding.
'The magnitude and volume of problems that Trump and his administration are creating is something that no state has ever dealt with before. So it will have limited use,' Andy Manar, the deputy governor on budget issues, said of the $100 million fund. 'But it will serve a very strategic role.'
The state has also expanded the state treasurer's authority to lend up to $2 billion to the comptroller to pay bills, building on emergency lending powers used during the budget impasse of former Gov. Bruce Rauner, as well as expanded payroll protections for state workers funded by federal grants.
Pritzker has said since President Donald Trump's inauguration that the state can't make up for multibillion federal funding shortfalls, although the scope of those cuts remains unclear as federal budget negotiations led by Republicans are ongoing in Washington, D.C.
The measures signed this month are intended to bridge gaps this year and begin to address the $1.8 billion that Manar said the Trump administration is withholding from the state. In February, the administration said nine state agencies, boards and commissions were unable to access funding obligated by the federal government.
Manar declined to say what the priorities might be for the new fund, but noted that critical areas that have recently seen lapses in funding include state inspections of meat and poultry facilities that were paid for by the federal government.
About 12,000 of the state's 55,000 employees are fully or partially paid for by federal funds, and covering payroll would be a top concern, Manar said.
The $100 million flexible fund, which Manar said was the administration's idea, pulls from about 50 existing funds that weren't being fully used, according to Illinois Comptroller Susana Mendoza, who compared the new reserve to a 'safety valve.'
Still, House Republicans in a statement criticized the governor for 'raiding funds to continue his war on the President,' noting that the fund pulls from pots of money that were at one point set aside for a specific purpose.
Another tool expanded under this year's budget allows for more flexibility in lending within state government.
During Rauner's administration, the General Assembly allowed the state to take out low-interest loans from the state treasury to pay certain bills amid a yearslong budget impasse, according to the state treasurer's office. In the budget year starting July 1, those loans — up to $2 billion — will be available to cover gaps in additional designated funds, such as the road fund, according to the budget implementation bill.
Other designated funds that could benefit from the expanded lending authority include funds for health care providers and hospitals, education and disaster aid, according to the comptroller's office.
While the authority already existed in a more limited form, it's been years since it was used, according to the treasurer's office.
'Our hope is we don't have to use this power at all, but it's a tool in our toolbox,' state Treasurer Michael Frerichs said in a statement.
And even if they're used, it's possible that neither the bridge fund nor the internal lending would be enough to cover broad cuts to large federal programs like Medicaid that some Democrats fear may come from the upcoming federal budget.
Barring a decision to convene this summer, state lawmakers aren't scheduled to return to Springfield until their annual fall session, when they could address any potential federal budget issues, the impeding fiscal cliff for the Chicago-area transit system, or both.
'We have prepared to the extent that we can, but much of what is going to be needed in terms of a response, we won't know until there's a bill passed by the Congress and sent to the president for his signature,' Manar said, asked whether a summer legislative session was likely.
Republican critics drew a comparison between the new bridge fund and the broad authority granted to Pritzker during the COVID-19 pandemic to spend billions of dollars in federal aid, including $2 billion from pandemic relief to make up for lost revenues at the time.
Unlike the COVID aid, however, the uses of the bridge fund are limited to where the legislature already approved funding.
'This is not going to be used counter to its intention,' Manar said.
The additional tools will allow for the state government to work in the short term around potential federal shortfalls while still maintaining the rainy day fund, a move that in turn helps the state to maintain its credit rating, Mendoza, the comptroller, said.
In balancing the state's $55 billion budget this year, the state already suspended about $45 million in contributions in the upcoming fiscal year that would have otherwise gone to the rainy day fund.
'Let's only break that glass in case of emergency,' Mendoza said of those reserves.
