Illinois’ rainy-day fund is, for all practical purposes, empty at a time when the state could really use some cushion.
With the stock market tanking amid widespread concerns over the coronavirus pandemic, Illinois doesn’t even have a full day’s worth of operating expenses in reserve. It’s an embarrassment and a stark reminder of why the policy decisions made in Springfield should matter to everyone who lives in Illinois.
Last week, Maryland Gov. Larry Hogan signed legislation allowing him to transfer up to $50 million from the state’s rainy day fund to pay for emergency operations. And Maryland’s comptroller recently called for the state’s General Assembly to authorize using $500 million from the state’s rainy-day fund to help small businesses affected by the pandemic.
In North Carolina, lawmakers want to tap into the state’s rainy day fund to send a one-time stimulus check to state taxpayers to help restore the state’s economy after COVID-19 has passed.
The state of Washington’s governor signed an emergency aid bill Tuesday that will take $200 million from the state’s rainy day fund, with $175 million of that going to pay for additional public health measures and the rest to an unemployment fund specifically aimed at the impacts from the disease.
Illinois’ rainy day fund, officially called the Budget Stabilization Fund, had $1,189,505.06 as of Wednesday. That’s about enough money for the state to operate, under normal circumstances, for about a quarter of an hour.
With many businesses closed, the state faces real economic challenges in not only responding to a pandemic, but also paying its bills and trying to help those affected by the outbreak. It’s a problem no one in the state can afford to ignore.
Gov. J.B. Pritzker has shut down thousands of bars and restaurants across the state to limit the spread of the coronavirus. That also means he has shut down revenue streams for the state, including video gambling and casinos, among others. That means less tax revenue. Had Illinois lawmakers managed to build up the state’s rainy day fund during the 11-year bull market that proceeded the pandemic, we would all be better positioned to get through the difficult times ahead.
Like other states, Illinois will see income, sales, gaming and other tax revenues start to decline.
In a report released last week, Fitch Ratings said most states had benefitted from the money they put away during recent years of low unemployment, strong investment returns, and overflowing state coffers. Illinois is not among those states.
“Some governments … are more vulnerable to budget strain from unexpected stress events such as the coronavirus pandemic,” the report said. “Ongoing market declines could increase pension liabilities and contribution needs over time.”
Illinois will face those challenges, and likely other financial difficulties, in the coming weeks and months. Because Illinois lawmakers failed to stabilize the state’s finances during the boom years, the well is empty for the coming bust. In fact, Illinois is in about the worst financial position of any state in the nation.
Let’s hope this serves as a much-needed wake-up call to Illinois lawmakers and the voters who elect them.
Policy and spending decisions matter. Illinois continues to make bad fiscal choices.