The prospects for new federal aid and a proposed budget that avoids negative rating triggers should preserve Illinois? investment-grade status, but neither moves the needle on the structural and pension albatrosses.
Gov. J.B. Pritzker’s proposed $95.5 billion fiscal 2022 budget, with a $41.7 billion general fund, clears what was estimated late last year as a $5.5 billion gap, using higher revenue projections and a combination of structural and one-time maneuvers.
In addition to higher tax collections and federal Medicaid matching dollars now expected, the budget holds spending level to fiscal 2021. It raises about $900 million in revenue by curbing corporate tax breaks, keeps some funds earmarked for local governments, the capital fund, and transit agencies and delays repayment of some inter-fund borrowing. It does not rely on an income tax or other general tax increases and it does rely on more federal funds as they are not yet approved.
Author(s): Yvette Shields
Publication Date: 19 February 2021
Publication Site: Fidelity Fixed Income