Gov. JB Pritzker Predicts A $10 Billion COVID-19 Budget Hole Over The Next Two Years

Illinois’ governor predicts the “unprecedented” economic hit from the pandemic will push state income and sales tax revenue into free fall.

Official Updates COVID-19 Pritzker
AP Photo
Official Updates COVID-19 Pritzker
AP Photo

Gov. JB Pritzker Predicts A $10 Billion COVID-19 Budget Hole Over The Next Two Years

Illinois’ governor predicts the “unprecedented” economic hit from the pandemic will push state income and sales tax revenue into free fall.

Illinois Gov. JB Pritzker delivered a fiscal gut punch Wednesday, predicting “unprecedented” economic fallout from the COVID-19 pandemic could leave the state with an alarming budget hole of more than $10 billion by summer 2021.

The governor called on President Trump and Congress to step in with a large-scale relief package that would bail out state governments across the country in similar straits. Pritzker said collectively, states will be $500 billion in the red during the next two years because of the pandemic.

“These are preliminary and estimated figures since this virus is not yet vanquished, and there remains so much uncertainty still about when that will happen,” Pritzker told reporters at his daily COVID-19 briefing.

In Illinois, state-imposed business closures from the month-old, stay-at-home order and resulting layoffs, idling hundreds of thousands of workers, have disrupted the treasury’s largest homegrown sources of funding: the state’s income and sales taxes.

Additionally, lottery sales are down, and the state’s 10 casinos have been dark since last month, worsening the state’s budgetary hit since the pandemic ripped past the state’s borders early last month.

But for the first time, the governor offered proof of how badly awash in red ink the state’s balance sheets are as a result of COVID-19, predicting economic upheaval in Springfield on a scale far larger than the severe downturns after 9/11 or the 2008 Great Recession.

“Folks, you don’t have to be an epidemiologist to see that the virus is going to hit our budget hard, a reality that’s being visited upon every state in the United States,” the governor said in his daily briefing on the virus.

In Illinois, the governor forecast an immediate $2.7 billion shortfall for the remainder of the state’s 2020 fiscal year, which concludes June 30. A far deeper budgetary shortfall is projected for the 2021 fiscal year that begins in July.

Pritzker said the annual deficit for that year could range between $6.2 billion and $7.4 billion, Pritzker said, depending on whether voters approve a constitutional amendment in November that would abolish Illinois’ flat income tax and replace it with sliding tax rates designed to make the wealthy pay more.

When state lawmakers moved last May to put the measure before voters this November, approval of the tax amendment was expected to infuse Illinois’ budget with more than $3 billion in new revenues.

Pritzker campaigned on instituting a graduated income tax and regarded getting the constitutional amendment positioned for fall passage as one of his crowning achievements of the 2019 legislative session. But with the pandemic, it’s been relegated to back burner status for the moment, though the governor made clear Wednesday he still regards it as a major priority.

“Look it’s on the ballot for November,” Pritzker said when asked about possibly rethinking the plan because of the pandemic. “I think people will be making their own decision about it. I would argue in a way that we may need it now more than ever.

“This isn’t just about one year,” he continued. “It’s about fixing the structural deficit that exists for the state. We’re in a pandemic. We’re in an emergency. This crisis is causing a significant disruption to our fiscal year coming up. But we have many years ahead, and I think a fairer tax system makes sense to me.”

The bleak financial picture came as state public health officials reported yet more COVID-19 casualties, though there is a continuing sense that the state may be at or has already passed the peak in this wave of illnesses.

State Public Health Director Ngozi Ezike reported 80 more COVID-19 deaths in Illinois during the past 24 hours, increasing the overall death toll here to 948. Additionally, there were 1,346 new cases of the coronavirus, bringing the total of those who have tested positive to 24,593.

On Monday, Pritzker pointed to state data showing fewer COVID-19 patients in intensive care beds across the state and fewer relying upon ventilators than last week.

“Even though we are flattening the curve,” Ezike said Wednesday, “we still have a ways to go, and we must tough this out together.”

Other developments to emerge from Pritzker’s briefing include:

  • Pritzker may require wearing masks in public: After New York Gov. Andrew Cuomo ordered residents to wear face masks when social distancing is not possible, such as inside grocery stores, Pritzker said he is also considering a similar requirement for Illinois residents. “Wearing a mask is protecting everybody else. You’re doing everybody else a favor,” Pritzker said. So far, Pritzker has only recommended people wear masks outside — he has not required it.

  • Could Illinois’ death count be undercounted?: New York’s death toll from the coronavirus pandemic skyrocketed after officials there added nearly 4,000 people who likely died from COVID-19 but were never officially tested to their official count. Ezike does not expect Illinois’ death count to follow a similar pattern, though. While the state’s total number of positive COVID-19 cases is significantly lower than it should be due to a lack of testing, Ezike said the number of people who have died of COVID-19 is a different circumstance because they were likely hospitalized. “Once you’re in the hospital, that’s definitely a population that would get tested. That was one of our prioritized groups,” she said.

  • Pritzker concerned the federal government may take Illinois’ PPE: After the Illinois comptroller released data on how the state was spending money on the coronavirus response, which totaled $169 million so far, the Chicago Sun-Times reported that Pritzker arranged for “secret” flights to China for personal protective equipment supplies. Why were they meant to be secret? Pritzker didn’t dispute that characterization, saying he’s concerned the federal government would get wind of his purchase of the in-demand PPE supplies and take it for its own national stockpile. “It is true that the federal government seems to be interrupting supplies that are being sent elsewhere in the nation, and so I wanted to make sure that we received what we ordered,” Pritzker said. Newly disclosed state contracts show his administration chartered two flights to Shanghai, China, at a combined cost of nearly $1.8 million.

  • Calls for federal support for farmers: Upon hearing reports that dairy farmers are having to dump their milk due to a lack of demand with restaurants and schools closed, Pritzker said he hopes the federal government offers special assistance to farmers — particularly in Illinois where corn and soybeans are a big component of the state’s economy. He also said he’d like to try to find a way to get farmers who might otherwise have to destroy spoiled goods to get those products to schools that are still giving out free or reduced-price meals to their students.

Dave McKinney and Tony Arnold cover Illinois state politics and government for WBEZ. Follow them on Twitter @davemckinney and @tonyjarnold.