Trump Calls For More Stimulus Money, Pritzker Warns of ‘Thousands’ of State Layoffs

President Donald Trump in a tweet on Wednesday called on congressional Republicans to back a huge new economic relief bill with “much higher numbers.”

But that call is completely out of step with the paired-down package of aid Senate Republicans have been supporting in recent weeks and that Democrats have rejected.

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Trump’s tweet comes just one day after Gov. J.B. Pritzker said Illinois faced laying off “thousands” of state workers and slashing services if more federal relief was not forthcoming. Pritzker said he has instructed his cabinet to identify 5% cuts that they can implement in every department this year in the event more federal aid does not arrive.

“State and municipal budgets across the nation and here in Illinois are being decimated,” Pritzker said at a news conference on Wednesday in which he called on the federal government to provide more aid to states. “It’s not a blue state problem or a red state problem. Texas is facing its biggest shortfall in its history and Florida’s governor likened their budget situation to the red wedding scene in Game of Thrones.”

Pritzker said the pandemic had already blown a more than billion-dollar hole in Illinois revenues this year and is projected to cost the state $5 billion in lost revenue for fiscal year 2021.

But budget expert Amanda Kass, associate director of the Government Finance Research Center at the University of Illinois at Chicago, notes that even while the governor may call for across-the-board cuts, in reality, as seen during the budget impasse under Gov. Bruce Rauner, “a lot of the budget spending ended up being mandated by court orders, consent decrees and various other provisions of state law.”

“It remains to be seen how much wriggle room department heads will have in terms of being able to make the cuts,” said Kass. “I would certainly think they would be looking at significant staff layoffs. I think it’s really about choosing the least bad option. While Illinois’s finances were maybe more precarious than other states, I think across the U.S. all state and local governments have limited options and I think it is really up to the federal government to step up and provide the support that is needed for governments to be able to weather this crisis without compounding its impact.”

Ted Dabrowski, president of Wirepoints, which creates research and commentary on Illinois’ economy and government, believes that even though the governor may call for them, 5% cuts across the board would be difficult to achieve.

“It’s a tricky thing because there are many things in government that can’t be cut,” said Dabrowski. “They can’t cut pensions. We know we can’t cut retiree health insurance payments or insurance. You are talking about billions and billions of dollars that can't be touched.”

Dabrowski says the crisis has made all the more urgent “reforms that should have happened a long time ago.”

Ralph Martire, who leads the Center for Tax and Budget Accountability, says that the proposed 5% cuts are not the biggest problem the state faces.

“It’s really the fiscal condition the state is in right now,” said Martire. “Right now, without additional federal aid going into the next fiscal year the state’s looking at a shortfall of over $13 billion in its general fund, and it only spends $28 billion on services. Do the quick math and it's about a 47% revenue shortfall if they just wanted to provide the same level of services next year they do this year.”

And Martire notes that about 96 cents of every dollar spent on services goes to just four things: education; health care; social services; and public safety.

“If they have to make those significant cuts, those cuts are going to come to these areas of spending,” said Martire. “And probably heavily more so on education because a lot of the health care spending is Medicaid spending and they just don’t have the authority to cut an entitlement program like that.”

Dabrowski says that the crisis wrought by the pandemic may force the state government to address financial problems that have been decades in the making.

“In 2010, we had the worst credit rating in the country already. During Gov. Quinn’s time we had $9.5 billion in unpaid bills,” Dabrowski said. “We had massive troubles before Gov. Pritzker got here. Unfortunately, he’s inherited that plus COVID.”

He says Pritzker has “tough decisions” ahead and that layoffs are seemingly inevitable.

“Other states were prepared for a rainy day and we weren’t,” said Dabrowski. “He has to look at payroll because that’s the biggest part of the expense. ... The bottom line is that with unemployment so high, with the economy struggling, he’s got to make government more efficient and less costly for the taxpayers.”

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