Prairie State Wire

Wirepoints published a letter April 17 written by Illinois Senate President Don Harmon (D-Oak Park) which amounts to a federal bailout request that asked for billions. 

To Wirepoints founder Mark Glennon, as well as the organization president Ted Dabrowski, it looks like an attempt to “use the pandemic as cover to get federal money to pay for Illinois pre-pandemic fiscal mismanagement.”

Parts of that request are crisis related, such as a billion dollars for public health, to help minority communities, and funding for Medicaid reimbursements and hardship payments for health care facilities. The request asks to increase federal medical assistance percentage to 65 percent.   

But much of the request, $19.6 billion, goes to help the cities and state with pension issues that existed before the pandemic hit. In the letter, Harmon writes:

“Here in Illinois, after years of financial instability and partisanship, we turned a corner last year with the approval and enactment of a bipartisan budget for fiscal year 2020 and investment in a statewide construction program to rebuild our infrastructure and economy. This outbreak and its lingering effects threaten the progress Illinois has made.”

Harmon outlines some of the questionable fund requests as follows:

$15 billion for a no-strings attached block grant; $6 billion for the state’s unemployment trust fund; $10 billion for the state’s pension funds; and $9.6 billion in unrestricted aid to Illinois municipalities

In the letter, Harmon notes that the $9.6 billion requested for direct aid to municipalities is requested in cooperation with the Illinois Municipal League and would be distributed per capita. Cities “anticipate unbearable revenue losses” as a result of the COVID-19 crisis, which will cause problems in funding retirement systems for police, firefighters and first responders working during the COVID-19 outbreak.

This bailout, Glennon and Dabrowski write, is expected to be in addition to federal assistance that was already authorized by Congress and the Federal Reserve Bank. Those funds include $4.9 billion from the CARES Act, and about $9.6 billion in a new Federal Reserve facility to purchase municipal bonds.

The state’s Republican delegation has also issued a response to Harmon’s letter published by Wirepoints, which the organization posted April 21.

That letter outlined actions Congress has already taken to address the needs of the public throughout this crisis and notes that the Republican delegation opposes using the crisis for “a full-scale federal bailout.”

They point out that several of Harmon’s requests point to problems with state policy, especially those related to pension funding.

“We … believe that reflects a fundamental problem with state policy: the promises made in the past, and still today, are inhibiting Illinois growth and prosperity for the future," the letter noted. "Even in the best economic climate, with some of the highest taxes in the nation, Illinois could not afford its obligations. This pandemic has not caused a pension crisis, it has further illuminated the one that already existed.

"Secondly, the sole justification for your $9.6 billion for Illinois municipalities is: ‘Those [revenue] losses will dramatically impact municipalities’ abilities to fund retirement systems’ for municipal workers while we honor and celebrate the service of first responders, their service in this crisis will not convince representatives of other states to pay for pension plans that Illinois has mismanaged.”

Instead of granting support for this request, the state’s Republican delegation suggests that the state reform the pension system, reduce state and local spending and be more responsive to the people and to reduce spending mandates on local governments. It also says that the state “must withdraw the graduated income tax increase to protect Illinois jobs that are already at risk from the pandemic and to stem the exodus of people and opportunity from our great state.”

The Democratic caucus of 40 members holds a majority in the Illinois Senate, and Harmon’s letter was sent on behalf of the caucus.