CHICAGO (Reuters) – Economic fallout from the coronavirus outbreak will cost Illinois $7.3 billion in revenue for the current and next fiscal year, Governor J.B. Pritzker announced on Wednesday.
Revenue revisions released by his office indicated drops of $2.7 billion in fiscal 2020, which ends on June 30, and $4.6 billion in fiscal 2021, due mainly to lower income and sales tax collections as unemployment skyrockets and consumer spending falls.
Even before the health crisis Illinois, the lowest-rated U.S. state, was on shaky financial ground with a huge unfunded pension liability and chronic structural budget deficits.
Moody’s Investors Service and S&P Global Ratings, which each rate Illinois a notch above junk, revised their outlooks for the state to negative from stable over virus-related concerns.
The Democratic governor pledged to get a new budget passed by the legislature, which has not met since early March.
“Illinoisans are all too familiar with the pain the lack of a state budget can cause, so let me just say up front: we will not go without a state budget,” Pritzker said in a statement, referring to a two-year budget impasse under his predecessor that deepened the state’s fiscal problems.
To help offset the revenue loss and to boost liquidity, Illinois will borrow from other state funds and issue $1.2 billion in short-term debt, its first cash flow borrowing since 2010. Illinois is also expecting an influx of federal dollars to cover virus-related costs.
Pritzker is hoping voters in November will approve a state constitutional change that would boost revenue by replacing the state’s flat income tax rate with graduated rates. If rejected by voters, the fiscal 2021 budget gap could grow to as much as $7.4 billion as the state must also pay off the cash flow debt, according to the revised revenue forecast.
Illinois has reported 24,593 cases of coronavirus, including 948 deaths.
(Reporting by Karen Pierog in Chicago; Editing by Matthew Lewis)