Gov. J.B. Pritzker, Senate President Don Harmon, House Speaker Emanuel “Chris” Welch and Comptroller Susana A. Mendoza have agreed on a plan to pay off $2 billion in emergency borrowing, thanks in part to the state’s strong economic rebound. 

The state borrowed $3.2 billion from the federal Municipal Liquidity Facility, of which $2 billion remains outstanding, for cash management and to pay for essential state operations at the height of the COVID-19 pandemic. Thanks to a number of factors, including the state’s investments in key economic sectors like small businesses and childcare providers, Illinois’ revenues have come in stronger than expected. This overperformance, in tandem with effective cash management by the Illinois Office of Comptroller, will be instrumental in paying down the outstanding federal debt.  

“Repaying the federal government is an important step in our efforts to ensure the state remains on sound fiscal footing,” Pritzker said. “The General Assembly has been a critical partner in utilizing the federal dollars to help the most vulnerable get through the pandemic. I also credit the comptroller in strategically managing cash flow in these trying times.”

The loan was scheduled to be repaid in three installments by December 2023. Instead, the comptroller will utilize the state’s revenue overperformance and effective cash management to pay off the debt in its entirety within the next budget year. Early repayment of the borrowing will save taxpayers up to $100 million in interest costs. 

Last week, the Governor’s Office of Management and Budget revised upward its General Funds revenue estimates by $1.469 billion for fiscal year 2021, compared to estimates published with the governor’s introduced budget in February 2021.  The state’s improved revenue outlook will help ensure that the state will have a balanced budget for fiscal year 2021.    

Final income tax payments received earlier this week, along with stronger year-to-date receipts in the state’s main revenue sources (individual and corporate income tax and sales tax) will allow the remainder of the repayment to occur beginning in the next several months. 

Illinois and its local governments are expected to receive more than $26 billion in allocations through ARPA, including $8.1 billion to the state for fiscal recovery funds that can be used through calendar year 2024 to help the state respond to and recover from the pandemic and invest in critical water, sewer and broadband infrastructure.