December 14, 2020
UPDATE: The $900 billion relief bill passed by Congress on December 21 did not provide more financial assistance for state and local governments, but it did extend for about one year the deadline for using the Coronavirus Relief Fund money discussed in this blog post. The spending deadline is now December 31, 2021 instead of December 30, 2020. State and local governments had been racing to use the money because unspent funds must be returned to the U.S. Treasury. Local governments in particular had urged lawmakers for the extension so they could better prioritize spending and cover costs related to the latest surge in virus cases.
As discussed below, hundreds of smaller local governments in Illinois that were eligible to receive funds indirectly from the State had not yet filed the required paperwork by mid-December and the State planned to reallocate the funds. On December 22, the Illinois Municipal League asked the Department of Commerce and Economic Opportunity to halt any reallocations and allow governments more time to use the money in line with the new deadline.
As the December 30 deadline looms for spending federal coronavirus relief money, the State of Illinois expects to be able to use its entire $3.5 billion allocation, even though only about 60% of the money had been spent by early this month.
Unspent amounts from the federal Coronavirus Relief Fund (CRF) must be returned to the U.S. Treasury Department, so Illinois and many other states are scrambling to make sure money is not left on the table. At the same time, states must be certain that expenditures conform to federal guidelines because money determined to have been spent improperly may be recouped by the Treasury.
As of December 4, Illinois had spent $2.1 billion of its $3.5 billion allocation, according to a recent presentation by the Governor’s Office of Management and Budget (GOMB). The total included $375 million spent in fiscal year 2020, which ended on June 30, and $1.7 billion spent so far in the current fiscal year. Although costs must be incurred by December 30—meaning that goods must be delivered and services provided by that date—GOMB officials said they expect to meet the spending deadline because funds may be paid out over the next several months.
The CRF is the largest pool of discretionary state funding authorized by Congress in response to the pandemic. Part of the Coronavirus Aid, Relief and Economic Security (CARES) Act passed in late March, the $150 billion fund for state and local governments may only be used for necessary, unbudgeted pandemic-related costs and is not available to offset lost tax revenue due to the virus. In April states received at least $1.25 billion each, depending on population, but the only local governments eligible for direct payments from the Treasury were those with more than 500,000 people.
As discussed in this blog post, Illinois received a total of $4.9 billion from the CRF. Of that total, $3.5 billion went to the State itself and the other $1.4 billion went directly to the City of Chicago and five of Illinois’ 102 counties: Cook, DuPage, Kane, Lake and Will. Cook County officials said in October that they expect to be able to spend their total $428.6 million allocation. As of the end of October, Cook County had spent $52.5 million and obligated another $290.9 million, according to a report to the County Board.
The distribution of CRF money and the pace of spending have been controversial from the start. The last comprehensive national report, which covered costs incurred from March 1 through June 30, showed that states and large local governments had spent about one-quarter of the funds received, leading to criticism that they were sitting on the money. At that time, Illinois had spent 14.4% of its allocation. However, the National Association of State Budget Officers said states had already allocated nearly 75% of the funding.
In FY2020 the Illinois Emergency Management Agency used $375 million of the State’s CRF money to buy personal protective equipment (PPE), pay for nursing staffing costs and set up alternate care and testing sites, according to the recent GOMB report. The report was presented at a December 8 meeting of the Restore Illinois Collaborative Commission, a bipartisan legislative commission created as part of the FY2021 budget to monitor Governor J.B. Pritzker’s efforts to revive the State’s economy in response to the virus. Although the Commission has received monthly reports from the administration since July 1, the December 8 virtual meeting was its second meeting that was open to the public; the first was a week earlier on December 1.
Illinois’ FY2021 budget, which was passed during an abbreviated four-day session in May 2020, also gave various agencies authority to spend the remaining $3.17 billion of the State’s share of the CRF. Public Acts 101-0636 and 101-0637 funded agencies’ operational costs and created grant programs to distribute the money.
For local governments that had not gotten direct federal aid, the Department of Commerce and Economic Opportunity (DCEO) received $250 million to be distributed through the Local Coronavirus Urgent Remediation Emergency (Local CURE) Support Program. Another $636 million was appropriated to DCEO for the Business Interruption Grant (BIG) Program for small businesses, including $260 million specifically designated for child care providers.
Additionally, the Illinois Housing Development Authority (IHDA) was authorized to spend $396 million to help tenants and homeowners hit by the pandemic pay rent and make mortgage payments. The Illinois Department of Healthcare and Family Services (HFS) was authorized to make $830 million in new grants to healthcare providers, including Federally Qualified Health Centers (FQHCs), long-term care facilities and ambulance providers. The Department of Human Services (DHS) received $62 million for grants to mental health, substance abuse and other counseling services and for welcoming centers that provide immigrant services.
The following table, showing Illinois’ CRF spending in FY2021 as of December 4, was included in GOMB’s presentation. The table does not include the $375 million spent in FY2020. The total FY2021 appropriation amount of $3.68 billion exceeds remaining available funds of $3.17 billion because actual spending needs were not known when the budget was passed and there was a possibility of additional federal assistance, according to GOMB.
As shown in the table, only $97 million had been spent on smaller local governments as of early December. At his daily COVID-19 press briefing on December 10, Governor Pritzker indicated that the total allocated amount was $147 million, including payments in the process of being sent out. Among the more than 1,400 eligible governments, 688 had been paid or had money on the way, while hundreds had yet to complete the steps required to participate in the program. All the money is still expected to be spent by December 30, as funds left unclaimed will be reallocated to other governments. Local governments may submit reimbursement claims through January 31. In addition, about $129 million was still remaining for grants to small businesses under the BIG program. The deadline for applications is December 15.
Of the $830 million appropriated for healthcare providers, HFS had spent only $150 million as of December 4. GOMB officials said the agency was preparing to send out payments totaling hundreds of millions of dollars. The State also expects to pay out additional reimbursements to cover agencies’ operational expenses related to the pandemic—such as overtime pay and costs for cleaning and remodeling State facilities to prevent spread of the virus and equipment to allow employees to work remotely.
Even if all the CRF money can be spent, Illinois and local governments are still urging Congress to provide additional financial assistance to make up for virus-related revenue shortfalls. No additional federal relief legislation has been enacted since last spring and aid to state and local governments has been one of the major sticking points between U.S. Congressional Democrats and Republicans. Leaders of both parties have begun discussing the possibility of moving such contentious issues into a separate bill to ensure that legislation will be passed before the end of the year. The Civic Federation continues to support additional federal revenue support for Illinois, Chicago and other state and local governments because of the federal government’s unique ability to mitigate severe economic and fiscal disruption.