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Illinois’s Initial Fiscal Response to the COVID-19 Recession

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  • Beverly S. Bunch

Abstract

Illinois had fiscal challenges prior to COVID-19, including a structural budget deficit, large unfunded pension and OPEB liabilities, minuscule reserves, and a significant backlog of bills. The COVID-19 recession has exacerbated Illinois’s fiscal condition. This paper describes Illinois’s initial fiscal response to the COVID-19 recession as of July 2020. This includes the state’s short-term borrowing from the Federal Reserve’s Municipal Liquidity Facility program, passage of a FY 2021 budget with a $6.5 billion deficit, and authorization for $5.0 billion in borrowing if additional federal funds and revenues from a proposed graduated income tax are not forthcoming. Under federal legislation approved as of July 2020, the state of Illinois expects to receive more than $5 billion in federal funding for COVID-related expenses. The state is using those funds to provide financial assistance to small businesses, local governments, state agencies, and other individuals and organizations.

Suggested Citation

  • Beverly S. Bunch, 2020. "Illinois’s Initial Fiscal Response to the COVID-19 Recession," Municipal Finance Journal, University of Chicago Press, vol. 41(2), pages 49-59.
    • Handle: RePEc:ucp:munifj:doi:10.1086/mfj41020049
    DOI: 10.1086/MFJ41020049
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