By: Mark Glennon*

To make its current budget, Illinois pretended it had already pocketed about $5 billion of help from Congress to make up for tax revenue shortfalls caused by the pandemic. It will need at least that much to repay short term borrowing it plans on taking from the Federal Reserve Bank.

Politicians are making their case for the federal help. Governor J.B. Pritzker and other officeholders are warning of what Pritzker calls “extraordinarily painful” budget cuts if the federal government does not come through.

There’s a reasonable case to be made for some federal money, but it’s not the one politicians are making. Thanks to absurdly oversized demands and a pointless blame game, the entire debate has become political melodrama and the legislation is stalled in Washington, jeopardizing any federal help whatsoever.

Here are the details:

There’s probably bipartisan support in Congress for at least some federal help on pandemic-induced revenue losses sustained by the state and local governments, common sentiment being that they bear no blame for those losses.

The total estimated cost of compensating state and local governments for those losses is much less than you might think.

Last month, The Tax Foundation estimated the combined state and local loss across the nation to be $280 billion. That includes losses for both last fiscal year, which ended on June 30, and the entire, current fiscal year. That estimate is roughly consistent with two other studies cited by the foundation, including one by The National Conference of State Legislatures. “The picture these new data continue to paint is one of a significant, but not catastrophic, says the foundation in its most recent update.”

That $280 billion isn’t so much when you consider how much Washington has been dishing out lately. Congress has already authorized over 25 times that – about $3 trillion in new spending since March for various forms of coronavirus relief, $150 billion of which has already gone to state and local governments.

And $280 billion spread across the nation would be plenty for Illinois if it got its proportionate share based on population, which is about 4%. Illinois would get over $11 billion, which would be more far more than enough to cover the $5 billion it needs to make its budget, and far more than enough to share with Illinois towns and cities that also want compensation.

But the demand from Democrats who control the House in Congress isn’t for $280 billion, it’s for $1 trillion!

It’s part of their bill calling for a new relief package with a total cost of a stunning $3.5 trillion.

Republicans, who control the Senate in Washington, entered the negotiations with a total plan of $1 trillion that included only increased flexibility on how states and local governments can spend the $150 billion they already got, which many think covers the problem. However, some within their own ranks are pushing for as much as $500 billion in additional state and local help, as recently reported by the Wall Street Journal.

The two parties remain far apart on other key issues, particularly the amount of extended federal jobless assistance. Both sides have included unrelated spending in their bills, though far more is in the Democrats’ bill.

It’s entirely possible Democrats don’t really want a bill at all.  “[House Speaker Nancy] Pelosi’s advisers are confident that if there is no deal, President Donald Trump and Republicans will be blamed,” reported Politico. Asked if she has an idea on the price tag she’s willing to settle for, Pelosi told CNN bluntly: “Yeah, $3.4 trillion.” If she’s serious that means she wants no bill because the GOP would never go for that. And she can be confident the national press will help by blaming Trump.

And watch Pelosi snap when asked about it Thursday by Judy Woodruff of PBS. Woodruff asked a simple question about Republican claims that they are flexible about aid to states and the rest of the package, but Pelosi accused Woodruff of being a Republican “advocate.”

Closer to home, Pritzker is blaming Republicans, as you would expect, but specifically, Republicans in the Illinois Congressional delegation, which is crazy talk. Illinois has no Republican in the Senate and those in the House have no real input on the Democrat’s bill there.

Then there’s Comptroller Susana Mendoza. Her case for federal money is based on her usual revisionist history. In a lengthy report, she claimed again that Illinois was on the right path until the pandemic came along, and that most problems stem from Bruce Rauner and the budget impasse while he was in office. As we detailed before, while Rauner and the impasse hurt, Illinois was a basket case before he became governor.

And Mendoza added the claim, which Pritzker has also used, that Illinois deserves federal money because it has long been a net donor in its balance of payments to the federal government. That’s a myth, as we recently explained.

As with Pelosi and the national press, Pritzker and Mendoza needn’t worry that the Illinois media will challenge them on any of that.

Their blame game may work, but that doesn’t mean they will get the federal legislation they want.

Our view on any federal aid remains as we have written earlier:

  • First, fairness and consensus demand that no state get more than its share based on population. Illinois was among the least prepared for a recession having reserves sufficient to cover just one hour of its spending. Chicago was also rated, along with Detroit, as least prepared among large cities for a recession. To give Illinois and other poorly managed states more than their share would be unfair to those who sacrificed to be prepared.
  • Second, in no circumstances should federal taxpayers be asked to bailout Illinois or any other state by providing more than what is needed to compensate for pandemic losses. That is, no bailouts for pre-pandemic mismanagement. Some Republicans in the Senate have been adamant about that.
  • Third, even if aid is limited to pandemic losses and fairly spread with other states, conditions should be attached demanding reforms.

It’s on that third point that Illinois request for federal aid is galling. Other states and cities are making the hard choices, slashing payrolls and costs to make ends meet.

They include Democratic states like New York, which said its spending cuts “have no precedent in modern times.”

But not a dime of spending cuts or other reforms have been undertaken by the Illinois.

So, if Illinois genuinely wants to ensure that federal help comes through, it should change its tune:

First, tell Nancy Pelosi and House Democrats that getting a bill passed is more important than embarrassing Trump. Tell them that what the real number needed is and to forget their inflated requests and unrelated items. Tell Illinois’ Democratic delegation to get that message across in Congress instead of blaming the Illinois GOP delegation, which has no influence.

Second, ask for no more than what is needed to cover pandemic losses, and no more than a fair share of federal aid based on population.

Third, de-prioritize the political blame game.

Fourth, put some skin in the game. Make spending cuts. Make reforms or at least commit to them if there’s no time, ideally, including a state constitutional amendment to allow for pension reform.

This article was updated to add the paragraph about the Pelosi interview by PBS’s Judy Woodruff.

*Mark Glennon is founder of Wirepoints.

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Juicy Smollier
1 month ago

Can Chicago’s budget even last halfway into 2021? They either make a deal with president Trump or even more people will leave (the productive ones of course) Chicago; Gary/Chicago might as well be what the region is called afterwards.

anonymous
1 month ago

Run as fast as you can out of this state.

Poor Taxpayer
1 month ago

It is one big PONZI SCHEME. The people getting screwed are the taxpayers.
Illinois is run by fools and crooks.

Robert Maitino
1 month ago

Mark, I realize that you have new readers that you likely need to bring up to speed, but the cliff notes version of EVERY piece you write is: Dems are corrupt, irresponsible, and only want more revenue to feed their Ponzi schemes. There is more than a little validity to this. What you Rarely do however, is give solutions. Obviously spending needs to be reduced. What exactly would YOU advocate cutting? Taxes are high enough already. Surely you favor NO increases, that goes without saying, but what cuts could we responsibly apply? If not, which I think is the case,… Read more »

Mike
1 month ago
Reply to  Robert Maitino

There is no political power to implement reforms via a constitutional convention or any other method.

The sloth continues plodding towards the cliff.

Mark Glennon is not a community organizer.

The position is open.

Robert Maitino
1 month ago
Reply to  Mike

No chance of a grass roots movement then Mike?

Wirepounts has greater reach than I’ll ever have. The politicians read it.

Community organizer? Ha!

Mike
1 month ago
Reply to  Robert Maitino

Grass roots / community organizing requires a lot of time, effort, funding, training, manpower, organization, leadership, etc.

Nowhere to be found.

Wirepoints, Illinois Policy Institute, Truth in Accounting, Edgar County Watchdogs, etc. are doing more than their fair share.

There is no organizational structure in place for grass roots / community organizing.

The so called grass roots is well funded by the left.

Mike
1 month ago
Reply to  Mark Glennon

I vote to make it into an article and update it monthly or quarterly.

Illinois Entrepreneur
1 month ago
Reply to  Mark Glennon

I found myself daydreaming of living in a state like this, if all these reforms and initiatives passed. Real estate would go bonkers in appreciation. Businesses would be clamoring for any spot to be here. Tax revenue would go through the roof.

Most importantly, people would feel the freedom that our founders intended and would have faith in their government again.

What a great response!

Illinois Entrepreneur
1 month ago

They are barking like this, not because they expect the current Congress and President to give them any money, but rather, the next. They are rolling the dice that all of their gaslighting in the past 3 years will have worked to create a win for Biden and the Senate.

THEN they will ransack the place and start giving away trillions. If the Democrats take control of all three branches — it’s lights out.

They’re always overconfident about their election chances, so I believe this is why they are playing it this way.

Juicy Smollier
1 month ago

Problem is … Trump is going to win. At best the Dems get the House. They’ll impeach again and it’ll go nowhere except the Deep State will start going to jail. Hopefully Obama and Pelosi too (though I’m not sure if she’s done anything criminal).

1 month ago

My group here in California, Citizens for Sustainable Pension Plans (CSPP), is pushing hard on “no bailout without pension reform”. As in Illinois, however, California is run by progressive Democrats totally owned by public sector unions.
Hopefully, the COVID-19 fallout will necessitate some major changes, starting with a reformed and sustainable pension system.

Last edited 1 month ago by JODY MORALES
UnclePugsly
1 month ago

I hope this is Ok, I thought it points out a lot of the phoniness of Pritzker and the Democrats on the China virus relief funding:

https://www.foxbusiness.com/markets/stop-laundering-covid-relief-money-sen-rick-scott

UnclePugsly
1 month ago

Good article, but one very important piece left out – Full transparency on the CARES money already allocated to Illinois for China virus expenses. Pritzker is STILL sitting on most of the allocation – How come?

Sadly, the Democrats playbook is ALL political.

PlanningAnExit
1 month ago

Friday update… Amazing how much time this crew of complete mutton-chops spends in front of mics blabbering on… and on… AND ON. Do you think he really believes he is worth ANYTHING in this crisis? Pathetic.

Zak Noles
1 month ago

Stop with giving away all those free masks from the government cashe. Porky Pricktzker should be using those you have in your warehouses that you sell along with breathing devices and medical paperwork…not to mention the company you own that does the medical documentation. Take those profits and give it to “you loyal subjects” that shouldn’t be voting Dementocrap, but for some reason do.. We all know what will happen to the Federal handout, it will be distributed to all the politicians to ‘help their cause’, it will be funneled into Madigan’s vault, all the thousands of state administrators will… Read more »

Dale
1 month ago

Outstanding article once again! Hit the nail right on the head. This State is infuriatingly frustrating with its incompetent AND corrupt politicians. More people need to start going to prison!

UnclePugsly
1 month ago
Reply to  Dale

Yes, and you don’t give these kind of corrupt politicians more money!

DantheMan
1 month ago

What do you suppose will happen if Illinois gets a nice paycheck from the Feds? It will spend, spend, spend and then demand more, more, more. This is my final comment here on Wirepoints. Since I have been away from Illinois for quite awhile, I feel increasingly unqualified to contribute to the discussion. My absence is good news for some of you that claimed I lack sympathy for those that remain in Illinois. You are actually right about that. I have no sympathy. I used to have sympathy, but the situation in the state has now been going on for… Read more »

Bill
1 month ago
Reply to  DantheMan

All my family has fled, we left in 2016. Paying ZERO state taxes now and very low property taxes and NO other creative and hidden taxes like we did in Illinois.
Where does all that Illinois tax money go? We have beautiful infrastructure and wonderful services and I get to keep most of my money. We drove through Highland Park and Lake Forest last month. WOW! Talk about a decline! The area is starting to look like a unkept dump!! Sooooo glad we fled!

Freddy
1 month ago
Reply to  DantheMan

Take Care of yourself and family. Be well and happy. I have been looking where to move for a while now. Many places with lower tax’s homes went up in value while mine went down or stagnant so the gap got much wider so I have to do some more number crunching. Again thanks for your input. Don’t forget what I mentioned on Vitamin D/zinc/magnesium/probiotics/Omega 3’s to stay healthy. Sickness is everywhere. Good health is scarce!

UnclePugsly
1 month ago
Reply to  DantheMan

Illinois is unfixable – It must be wrecked like Detroit before any reforms can happen. All responsible folks in Illinois have an escape plan.