The self-congratulation was effusive when the state’s top elected officials announced plans to pay off a loan from the federal government.
Given that Illinois faces a mountain of debt, it’s always a good thing when our elected officials get together and agree to, however slightly, reduce it.
That’s why Gov. J.B. Pritzker’s announcement last week that the state plans to repay a remaining $1.36 billion debt to the federal government is both welcome and somewhat surprising.
It’s too often been the case that legislators can’t wait to spend whatever cash is lying around, running up further debts rather than reducing existing ones.
So give Pritzker, his legislative minions and business and labor groups credit for agreeing on what passes for a financial fix in this state.
Because of Illinois’ poor financial condition during the coronavirus pandemic, it was forced to borrow $4.5 billion from the federal government to keep its unemployment-compensation trust fund in operation.
The fund, which provides financial aid to those who’ve lost their jobs, was essentially bust before the feds came to Illinois’ aid.
Illinois was one of 22 states needing assistance, and it is one of just four that hasn’t repaid the debt.
The state earlier had paid $2.7 billion back, and there has been a lengthy discussion as to when Illinois should pay the rest.
Per the agreement, which is permitted by the state’s strong revenue growth, Illinois will pay the remaining debt to the feds plus deposit an additional $450 million into the fund to keep afloat.
That $450 million represents an interest-free debt the fund owes the state.
Just as the longest journey begins with but one step, paying off the state’s $200 billion-plus pension, health insurance and federal borrowing debts is equally challenging.
Consider that Illinois paid off its $4.5 billion debt to the federal government from the many billions of dollars in coronavirus financial aid it received from the federal government.
This arrangement is akin to a fellow borrowing money from a bank and then repaying the debt using money the bank gave him in a without-strings gift.
Under those circumstances, neither the feds nor the borrower deserve plaudits for financial management or sobriety.
There’s also the additional problem of the unemployment fund needing $1.7 billion to restore it to necessary financial strength.
It gets $450 million in loans as part of the agreement the governor announced, but it will take more money from employers in unemployment taxes to achieve the long-term goal.
