As now written, the rules appear to prevent the state from using any of the money to directly repay the $2.1 billion it borrowed last year from the Federal Reserve. Local officials say that’s unfair since money wasn’t used to pay old debt but to replace tax revenue lost to COVID and avoid layoffs and program cuts.
“We’ve been going back and forth with the White House” since the preliminary rules were issued, Pritzker spokeswoman Jordan Abudayyeh told me.
She declined to say who was called but said they are “high up” in the Joe Biden administration. Asked if the governor himself has called the president—both are Democrats—Abudayyeh replied, “Not yet.”
Also working the phones has been Illinois Comptroller Susana Mendoza, who’s been in touch with Sen. Dick Durbin, D-Ill., and U.S. Rep. Raja Krisnhamoorthi, D-Schaumburg.
Mendoza also wrote to Treasury Secretary Janet Yellen, saying among other things that the borrowed money was used to replace lost revenue, pay Medicaid and other providers and purchase protective equipment when the pandemic first hit.
“This borrowing was essential for the continued performance of government services during the most challenging times to the state’s cash flow during the pandemic, all directly related to the COVID-19 crisis,” Mendoza wrote.
Mendoza also writes: “My specific request is for the Department of the Treasury to clarify this rule to accommodate this unique circumstance; allowing fiscal recovery funds to be used to directly COVID-necessitated short-term borrowing.” (Read the letter below.)
Meanwhile, Durbin and members of the state’s congressional delegation also have written Yellen, making the same arguments and even attaching a copy of Mendoza’s letter.
Other fiscal experts say the state might be able to work around the situation even without a treasury shift, moving money from one pot to another. But the new state budget is scheduled by be approved by May 31, and officials here would like as much certainty as soon as possible.”