CHICAGO (WMBD) — Gov. J.B. Pritzker announced the state would apply for “short term borrowing” from the Federal Reserve to help pay state debts.
He outlined expenses the state accrued through the pandemic, such as goods like PPE and ventilators. He said the CARES ACTS, the federal program that gave direct funds to state and local governments to partially reimburse spending for protection from the virus.
“Today, we have notified the Federal Reserve of our intent to borrow only $2 billion, less than half of the $5 billion being offered to us by the federal government,” Pritzker said. “This was a joint decision that I made after close consolation with Comptroller Mendoza and Treasurer Frerichs, and I want to thank them both for working together on this short-term strategy to manage the near-term financial challenges brought on by the pandemic.”
Pritzker said tax revenue took a massive loss during the pandemic. He said those funds support public programs like schools, roads, police, social services, and healthcare, saying shutting down the state and losing tax revenue cost the state more than $5 billion.
Following the explanation, Pritzker said he planned to borrow money from the Federal Reserve to help offset the costs of the “short-term deficit” of the year.
Pritzker said he intends to repay the line of credit as soon as possible, either through a stimulus approved by Congress or a “sufficient recovery of state revenues.” He acknowledged “adding debt is not a long-term solution to structural imbalance.”
“Short-term borrowing is a short-term band-aid to address the urgency of a short-term problem like one caused by a pandemic,” he said. “Our long-term fiscal health must also be addressed, but not with short-term borrowing.”
He said he consulted with the General Assembly to determine where Illinois can make significant cuts across state government, but that would only be a start.
“We’re going to be able to cover the short-term losses from COVID-19,” Pritzker said.
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