Illinois state government is getting $7.5 billion in COVID relief funds The Illinois Statehouse is shown in May. ERIN HOOLEY, CHICAGO TRIBUNE BRENDEN MOORE SPRINGFIELD — For most Americans, the impact of the most recent federal COVID-19 relief package has come (or will soon come) in the form of a $1,400 stimulus check wired directly
Illinois state government is getting $7.5 billion in COVID relief funds
The Illinois Statehouse is shown in May.
SPRINGFIELD — For most Americans, the impact of the most recent federal COVID-19 relief package has come (or will soon come) in the form of a $1,400 stimulus check wired directly to personal bank accounts.
But for governors, mayors and budget officials, the most promising sign that help is on the way comes from the $350 billion set aside in the $1.9 trillion American Rescue Plan for state and local governments, which have seen their revenues decimated by the COVID-19 pandemic.
Illinois Municipal League Executive Director Brad Cole
In Illinois, state government is expected to receive about $7.5 billion in direct aid and local governments about $5.5 billion.
Of the latter, counties will receive about $2.4 billion, larger cities about $2.4 billion and smaller municipalities about $681 million.
Illinois will also receive $275 million for vaccine distribution, $1.5 billion for additional COVID-19 tests and other needs of local public health departments and $5 billion for K-12 schools.
Governments are expected to receive half their allotment in the next 60 to 90 days. The second round of funding will not arrive until at least 12 months after the first distribution.
There are restrictions, mainly that the funds cannot be used to make pension payments or to provide tax relief. But, it is more flexible than past packages.
The funds can be used for costs associated with responding to the public health emergency, such as the purchase of personal protective equipment and providing rental assistance and grants to small businesses.
They can also be used to replace lost tax revenue and to make investments in water, sewer and broadband infrastructure.
Illinois Municipal League executive director Brad Cole said the package was “critical” for local governments, which have seen dips in sales tax revenue and, in many cases, increased costs associated with the pandemic response.
And, unlike the first relief bill signed last year, when states exerted a larger role in distributing funds for local governments, these funds — though still to be divvied out by the states — will go directly to municipalities without additional restrictions attached.
“Local governments got tied up by the state governments across the nation in the federal CARES Act a year ago,” Cole said. “This is going to distribute the money directly and without additional restrictions. So it will make up for a lot that was lost in the first relief package.”
What to know about the coronavirus relief funding coming your way
LIMITED SPENDING
Much of $1,200 checks issued in the first round, as part of the CARES Act, did not generate spending sprees. The National Bureau of Economic Research found that almost 60% of the money went to pay down debt or into savings.
Researchers at the University of Chicago found that households on average spent 40% of the first check, mostly for food, beauty items and other products that people hoarded in the early days of the pandemic. Little went to purchases like cars or appliances.
Economists reasoned that with lockdowns in place last spring, there were far fewer options for spending the money.
One other factor to watch this time, given the size of the checks: Economists say that the greater the check, the less likely people are to spend it.
BILL PAYING
A survey in early January by Bankrate.com found that 71% of people said the second-round $600 checks they expected to receive for every adult and dependent child in a household would only sustain their financial well-being for less than a month. Four in 10 people surveyed said they would put the funds toward monthly bills such as rent or mortgage payments and utility bills.
ERASING DEBT
Almost 5 million people in Illinois age 18 and older said someone in their house received a relief payment in the previous seven days, according to data collected by the Census Bureau between Feb. 17 and March 1. Of those who detailed their plans, almost 2.4 million said it would be mostly be used to pay off debt.
SAVING
With the third round of relief payments, Bank of America anticipates more of the funds will be saved in one way or another, not spent. In its survey of 3,000 people in late February, only 36% of respondents said they planned to spend the money. The rest had other plans: 9% planned to invest it, 25% would save it and 30% would use it to pay off debts.
It’s not good news for sellers of food, clothing and other necessities. Planned use of the money in those categories is anticipated to be down almost 5% from what people planned to do with the payments last year. One bright spot is vacation and travel, which saw big gains compared with earlier surveys but it was still a small part of overall picture.
Bank of America found that every household income group planned to save much more than normal. Among high earners, people with household incomes of more than $120,000, 79% said they either planned to save it, pay off debts or invest it. That same sentiment was echoed by 53% of people surveyed who had household incomes of less than $30,000. The lower-income group also reported the highest intentions of spending it on food, clothing and other needed purchasers.
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