How Illinois is spending $8.1B in federal relief

The Illinois General Assembly recently approved spending $2.7 billion to reduce part of $4.5 billion of debt in the unemployment insurance trust fund, the fund that pays for unemployment insurance benefits.

The money came from the federal government through the American Rescue Plan Act, a stimulus package passed by Congress and signed by President Joe Biden just over one year ago, in March 2021.

Illinois has received $8.1 billion of the funds aimed at providing the state relief from the impact of the coronavirus pandemic.

The plan to pay down unemployment insurance debt, SB 2803, was signed into law by Gov. JB Pritzker on March 25. It passed in the Senate the day before on a partisan 39-16 vote and passed in the House 68-43. The state's Office of Management and Budget said about $800 million of ARPA money remains unspent and unallocated.

Democrats have lauded the spending plan as a move toward fiscal responsibility, Republicans have accused the majority party of squandering the ARPA funds on "pet projects."

Where did the money go?

The $2.7 billion fight

The plan to direct $2.7 billion toward the unemployment insurance obligation became a partisan fight with Republicans staunchly opposed to the measure, saying that it didn't go far enough to pay down the debt.

"This bill pays for pet projects for the Democrats," said Rep. Tim Butler, R-Springfield, during the debate. Several other House and Senate Republicans levied similar claims.

Butler also criticized the governor for what he said was a slight at Republicans saying that some people would be barred from "seats at the grown-up's table" during budget negotiations.

"Tonight with this vote, this side of the aisle is the grown-up's table," said Butler.

Democrats defended the state's use of ARPA money.

"ARPA dollars have been used to keep day cares open, to keep people in their homes, to provide cash to small businesses on the brink of disaster, many of which were shut out of the federal small business lending program," said Pritzker before signing the unemployment insurance trust fund appropriation bill.

Independent analysts have praised the decision.

"Overall, I think the state's decision to use ARPA for replenishing the deficit in the unemployment insurance trust fund was fiscally wise and prudent," said Laurence Msall, president of the Civic Federation, a nonprofit research group.

Msall said the move, in addition to the ongoing "agreed bill process" to develop a plan for the remaining $1.8 billion in debt will help reinforce the state's recently improved credit rating. A good credit rating makes it easier for the state to borrow money.

"Illinois is not in a position to add more stress to its budget," said Msall.

State, local tally: $25 billion

The Office of Management and Budget estimates that Illinois will receive $25 billion of federal ARPA money. The total includes money flowing directly to agencies and local governments, such as $5.5 billion allocated to local school districts through the Elementary and Secondary School Emergency Relief Fund.

But the state received $8.127 billion in funds that the governor and legislature could allocate as needed.

"That amount of money coming into the state of Illinois, that $8.1 billion, is unprecedented," said Msall.

Throughout the spring of 2021, shortly after ARPA was passed, the governor and legislature began appropriating funds for various projects.

The largest portion of ARPA dollars allocated in 2021 went to one-time capital infrastructure projects. All told, $1 billion of spending was dedicated to broadband and sewer infrastructure projects.

These included direct grants to local governments around Illinois. Lake County was allocated $122 million for regional stormwater management projects, with other recipients including Belleville, Bolingbrook, DuPage County, Calumet Park and Champaign, among more than 40 others. The Sangamon County Water Reclamation District got $4 million for infrastructure improvements, though the city of Springfield didn't receive this kind of funding.

"It was not an unreasonable use," said Msall, who pointed out that the spending helped smooth out the overall state budget in the past year.

"It's a balancing act," he said.

The "Back to Business" grant program was the second-largest area of spending, according to records from the governor's office.

As of March, small businesses around the state have received over two-thirds or 67% of the $300 million.

The largest recipients in Springfield were mostly in the hospitality industry, a sector hit particularly hard by the pandemic.

Springfield Crowne Plaza and Springfield Holiday Inn Express both received grants larger than $200,000. The largest grant recipient in Springfield, with $245,000, was Ehrhardt Hospitality, a company that owns several Comfort Suites.

All told, businesses in Springfield received $4.55 million as part of the program, according to records from the state's Department of Commerce and Economic Opportunity, which manages the program.

About 14% or $380 million of the ARPA money went directly to support the state's response to the pandemic. It included funding the Illinois Emergency Management Agency's efforts to buy personal protective equipment as well as setting up vaccination and testing sites.

It also included $7 million to the Illinois Lottery, which operated the "vaccination lottery" in 2021.

Pritzker pitches $535M in new ARPA spending

As part of Pritzker's annual budget address, the governor laid out a proposed fiscal year 2023 budget which

includes $535 million in new ARPA spending — $235 million toward violence prevention grants and $300 million to support COVID-19 related programs at the Illinois Emergency Management Agency, Department of Corrections and Department of Human Services, according to Carol Knowles, a spokesperson for the Governor's Office of Management and Budget

The state's final budget has yet to be approved but lawmakers must vote on it before the General Assembly ends April 8.

The budget also includes $1.5 billion of ARPA spending that was approved in the 2022 budget.

Among the provisions are $50 million for substance abuse prevention and mental health block grants, $11.6 million to "support rural transit districts," $5 million for technology infrastructure," according to the governor's budget proposal.

It also includes allocations to various private and public programs. These reappropriations and grants range in amounts from $75,000 for a program aimed at helping former prisoners in Champaign-Urbana to a $12 million allocation for Parents Too Soon, a state-run program to provide services to teenage parents.

Some other programs receiving reappropriations include $2.5 million to support disadvantaged and urban farmers, $500,000 to Violence Interrupters, $500,000 to small businesses micro-loans, and $250,000 to Ex-Cons for Community and Social Change among others.

Contact Andrew Adams: [email protected]; (312)-291-1417; twitter.com/drewjayadams.