In today's briefing the Governor gave an update on the fiscal impacts COVID-19 will have on the State budget for this fiscal year 2020 and the following fiscal year 2021. The Governor shared that budget experts estimate a $2.7 billion shortfall for this fiscal year and $4.6 billion shortfall for next fiscal year. The FY2021 shortfall is projected to be even higher if the Fair Tax Amendment to the state constitution doesn’t pass this November. The projected shortfall in that case would be $7.4 billion.
State budgets are reliant on multiple sources of revenue including income tax, sales tax, lottery and gaming revenues, among others. As Governor Pritzker highlighted, this pandemic has disrupted every State's sources of revenue across the country regardless of political affiliation and regardless of how quick their governments acted to address the pandemic. The State is currently facing two major issues in this pandemic: addressing the public health crisis and solving fiscal challenges.
Earlier this year Governor Pritzker proposed a balanced budget aimed at funneling more funds into our State’s infrastructure, human services, public safety and school needs. This was long needed after the budget impasse we faced under the previous administration. Due to this pandemic we are looking at fiscal hardships for fiscal year 2020. The $2.7 billion shortfall in this budget cycle mentioned earlier reflects $1 million due to the extension of filing deadlines for State income tax returns. Those funds will now be received in fiscal year 2021. In an effort to close the fiscal year 2020 gap the Governor has asked State agency directors to identify cut backs. State Treasurer Michael Frerichs and Comptroller Susan Mendoza's offices are both assisting to secure $1.3 billion is short term borrowing to close the rest of the gap in fiscal year 2020.
Fiscal year 2021 budget estimates are showing at least $4.6 billion less in State revenues. When accounting for paying back the short term borrowing in for fiscal year 2020 the gap is $6.2 billion and if in November 2020 the constitutional amendment on the ballot to eliminate the flat tax and allow the state to adopt a progressive tax does not pass will expand our deficit to $7.4 billion.
The Governor is continuing to work with our Illinois Congregational delegation to craft additional relief at the federal level. The CARES act and previous relief bills passed at the federal level have provided significant funding, but those funds are strictly dedicated to expenses related to COVID-19 response, but can not be used to replace lost revenue as a result of the crisis. It is hoped that the next federal bill will address revenue shortfalls that are being experienced by state and local governments nationwide. The Governor was resolute in discussing the potential impacts on our state if we are not able to get federal relief for these shortfalls but made very clear that he won’t allow the state to return to our recent history of operating without a budget, nor will he allow the budget to be balanced on the backs of the most vulnerable.
