Local governments set to get small slice of $4.9B coronavirus relief package headed to Illinois
Wednesday, May 27, 2020
The Daily Line
by Hannah Meisel
Illinois is set to receive $4.9 billion of the $2 trillion coronavirus relief package set for a vote in the U.S House Friday — and state officials will need every penny to help mitigate the economic toll of the pandemic.
A record-shattering 114,000 Illinoisans applied for unemployment benefits last week, the state’s Department of Employment Security reported Thursday, erasing two years of job gains for the state.
Large chunks of the $4.9 billion set to flow into Illinois’ coffers are set aside for election assistance, law enforcement and education emergency funding. In addition, Illinois cities and towns are set to receive $16.3 million.
Gov. JB Pritzker on Thursday called the package “progress,” while acknowledging more assistance will be needed down the road.
“Let’s recognize a win when we see one,” Pritzker said. “Does more need to be done? Yes.”
Appearing with Pritzker Thursday, U.S. Sen. Dick Durbin (D-Illinois)?called it “miraculous” that Congress was on the verge passing the third major piece?of legislation to address the pandemic.
However, the relief package only provides funds for state and local governments with more than 500,000 residents.
Illinois Municipal League Executive Director Brad Cole on Thursday wrote a letter to Pritzker urging him to distribute money to local governments on a per capita basis.
“As you are aware, only one municipality within Illinois meets this requisite population threshold,” Cole said, referring to the city of Chicago. “In effect, Congress has turned a blind eye to the economic crisis facing all municipalities and has effectively ignored 1,297 of Illinois’ cities, villages and towns. This action is a failure on the part of Congress to provide the necessary fiscal resources that all Illinois municipalities need.”
Cole told The Daily Line Thursday that distributing the money to local governments by population size was “the only reasonable” solution.
“Every community in Illinois is suffering,” Cole said.
Cole said he and his counterparts in other states were hoping for an additional $100 billion for local governments in the relief package, but said he expected supplementary funding bills to pass through Congress in the coming months.
“We’re going to be dealing with the consequences of this for some time to come,” Cole said “We don’t even know when it’s going to end. I see this as the front end, not the back end.”
The relief package requires state and local governments to spend block grants on public health initiatives designed to stop the spread of coronavirus, also known as Covid-19.
It would be “difficult to see a positive impact” with future relief or stimulus packages if there are “too many strings are attached,” Cole said.
Tim Bartik, a senior economist from the Upjohn Institute for Employment Research in Michigan, told The Daily Line that both the limited amount of money for local governments included in the relief package and the lack of flexibility on spending concerned him.
“[Local governments] can spend it on public health stuff you didn’t budget for,” Bartik said. “But if your tax revenue’s collapsed because of economic problems, you can’t use it to keep police, fire or other employees on. You have to use it for additional services you weren’t planning for.”
Those restrictions could create “a really strange situation” where local governments have a surplus to spend on public health, “but not regular activities,” Bartik said.
That could hamper hopes for a “V-shaped recovery,” in which a recession’s shape charted on a graph takes a swift nosedive but also experiences a sharp upturn, Bartik said.
“This essentially is a planned recession; we’re shutting the economy down,” Bartik said of the executive measures many governors, including Pritzker, have taken to shutter non-essential businesses to prevent the spread of Covid-19. “We hope it comes back like a V. But if state and local governments — due to balanced budget requirements — are cutting spending in the fall and [government and consumer] spending plummets, that’s going to have a negative effect on the economy.”
If state and local governments lay off workers and cancel planned purchases, consumer spending will also drop, hurting local economies, Bartik said. Relief funds for local governments should be aimed at areas that were struggling economically before the virus spread.
In addition, Pritzker announced on Thursday that the federal government had approved Illinois’ application for a disaster declaration, which makes the state eligible for more federal aid, including the Community Disaster Loan Program administered by the Federal Emergency Management Agency. The Municipal League last week had requested the loan program be opened up to Illinois, which now joins New York, California and Washington state in being eligible for the disaster funds.
Related: Municipal league asks Pritzker to request FEMA funds for municipalities for COVID-19 relief
In order to qualify for the program, municipalities have to lose more than 5 percent of tax revenues. The loans are capped at either $5 million or 25 percent of a municipality’s annual budget — whichever is smaller.
Cole said he and others were working to increase the caps on the loans and advised municipalities not to apply for loans until the effort is successful and local officials know the full extent of Covid-19 on local revenues.
“There’s going to be a lot of stuff out there that communities are going to be eligible for or applying for,” Cole said. “We’re going to help them but it’s got to be systematic and deliberate…they should maximize whatever they’re eligible for.”
TAGS: Brad Cole - COVID-19 - Illinois Municipal League - JB Pritzker
About Hannah Meisel
@hannahmeisel | email@example.com
Hannah Meisel is The Daily Line's Springfield reporter. She came to TDL after a short stint with Rich Miller's Capitol Fax blog. Previous stops before that include Law360, Illinois Public Media/WILL and NPR Illinois/WUIS. Meisel holds a bachelor's degree in journalism from the University of Illinois at Urbana-Champaign and a master's degree in public affairs reporting from the University of Illinois at Springfield.