State lawmakers consider ways to spend $7.5 billion in federal Coronavirus relief funds

SPRINGFIELD, Ill. (NEXSTAR) — With Congress sending $7.5 billion in federal Coronavirus relief funds to the state of Illinois, state legislators are starting to debate how much of the money should go towards paying down old bills, how they might divvy up any remaining funds, and who gets the final say on how to spend it.

Comptroller Susana Mendoza has already said that “any federal funds that come into the state of Illinois are spoken for.” Aides in her office said she plans to use the money to pay down old debts or repay money the state borrowed from the U.S. Federal Reserve.

The state owes the Federal Reserve’s Municipal Liquidity Fund nearly $3 billion, and has roughly $5.4 billion in unpaid bills, according to a spokesman for Mendoza who said the legislature already appropriated those funds in prior budgets.

“According to the state constitution, the General Assembly has the appropriation authority,” Assistant Senate Majority Leader Bill Cunningham (D-Chicago) said on Wednesday. “We give the governor the ability to spend.”

A spokeswoman for the Pritzker administration said his budget office believes they have broad discretion over how to use the federal funds, especially when it comes to paying down old debts and expenses incurred during the pandemic.

“I would hope that they will bring it through the normal appropriations process with the legislature,” Senator Don DeWitte (R-St. Charles) said on Tuesday.

DeWitte suggested Governor Pritzker should reconsider his budget plan to freeze education funding in place now that the state has some budgetary breathing room.

“We were very disappointed that he chose to remove the annual $350 million increase into education that he committed to when he first became governor of this state,” DeWitte said. “Maybe some of that money could help replenish that $350 million that he pulled out of this year’s budget.”

However, Senate President Don Harmon, who has begun discussions with Governor Pritzker and House Speaker Chris Welch about how to spend the federal relief funds, has said the funds should be treated as “one-time resources to solve one-time problems.”

“This is one-time money, and we should spend it very carefully,” Senator Dave Koehler (D-Peoria) echoed on Wednesday, referring to education funding levels as “an ongoing budget issue.”

Last month, Rep. Will Davis (D-Hazel Crest) said it was “unfortunate that the governor’s budget doesn’t prioritize education properly in the way it should to make sure that we are putting new money into the education formula.”

“Some of our decisions as a legislature will be what we think the priorities are budget-wise, regardless of what the governor has said in terms of what he wants to do,” Davis said.

House Democrats met virtually on Tuesday and discussed how the legislature might approach budget negotiations with the Governor’s Office.

“Many of us feel that education should be the number one priority,” Davis said. “Our work on the school funding formula under the last administration should be acknowledged, should be recognized. And we should be able to prioritize new dollars in the education funding formula so that we can continue on the progress of making sure that our children are educated appropriately.”

The ‘American Rescue Plan’ also includes more than $5 billion in federal relief for K-12 school districts which the State Board of Education will distribute based on a pre-determined formula.

Mendoza’s office said the state will get the funding in two separate installments. One wire transfer worth $3.75 billion is expected to arrive in the next 60 days, while the other half is scheduled to come a year from now.

“We will work with the governor’s office, and we’ll make sure that we appropriate the money in the right way,” Koehler said.

The U.S. Treasury is expected to issue guidance to state and local governments to instruct them how they can and cannot spend the relief funding in the coming days, though this round of funding is expected to include far more flexibility than previous CARES Act dollars, which required states to spend the funds exclusively on issues related to the pandemic.