Week in Review: Reopen, state budget, jobs & more

House Republicans propose safe economic recovery plan. The next phase of combating the global COVID-19 pandemic is to repair the economic devastation it has wrought in its wake. It is a monumental effort that will only be successful if Legislative and Executive branches work together. The Illinois General Assembly is a separate but co-equal branch of government. We strongly believe it is the responsibility of legislators to work with the Executive branch to implement a plan to re-open Illinois’ economy on a safe, responsible, and regional basis.

The House Republicans are proposing a multifaceted framework to safely re-open the state and put Illinois’ economy on the road to recovery. We submitted our Re-Opening and Recovery Plan to Governor Pritzker on Monday, prior to the Governor announcing his “Restore Illinois” plan. The House Republican plan would create a COVID-19 Economic Recovery Commission and take a regional approach to re-opening and recovery.

The House Republican Caucus supports a regional approach to economic recovery. Across Illinois, private citizens, health care professionals, business leaders, and government officials are offering thoughts and input on how to address both the public health emergency and the economic crisis we are currently facing. Many have advocated for a regional approach to managing the situation.

Other states have developed recovery plans that utilize regional or county-by-county approaches, rather than imposing a one-size-fits-all plan on large and geographically diverse populations.

For more information on our Re-Opening and Recovery Plan for Illinois, please click here.

Gov. Pritzker’s plan does not work. On Tuesday, May 5, Governor JB Pritzker announced his “Restore Illinois” re-opening plan. Pritzker’s plan faced immediate criticism from Republican legislators, including House Republican Leader Jim Durkin, who said, “This plan does not work.”

The House Republican Caucus has been working since the start of the pandemic to propose reasonable plans that respect the data we are seeing and the safety of Illinois residents.

The stay-at-home order was the right thing to do to stop the spread of the virus and has flattened the curve enough that the Governor has begun dismantling the overflow capacity that was quickly built up at McCormick Place.

The most recent stay-at-home order reflected many of the suggestions our caucus put forward including the opening of state parks, garden centers and allowing our healthcare providers the ability to perform testing and elective procedures to help save lives.

In recent weeks, the House Republican Caucus has been bringing plans to the Governor on how to regionally re-open Illinois now that the initial curve has been flattened.

While the Governor’s Restore Illinois plan lays out a regional approach, it could be months or even years before the state could fully re-open as we wait for a treatment or vaccine to fit in his plans.

It is clear that the Governor does not have the ability to place years-long mandates on the state without the General Assembly taking action. Every day we depend on essential workers, but the General Assembly has ceded its ability to be called essential if we do not meet.

The Governor has presented a plan, and now the General Assembly must convene to take up his plan if it is expected to be put into place. We need to debate the merits of his approach.

It is time for the General Assembly to get back to work in Springfield.

Revenue projections for FY20, FY21. On Thursday, May 7, the Commission on Government Forecasting and Accountability (CGFA) compiled informal new numbers for Fiscal Year 2020 (FY20) and Fiscal Year 2021 (FY21), the fiscal years that will be affected most by the global COVID-19 pandemic and associated economic downturn, as well as a series of stay-at-home emergency orders promulgated by Governor Pritzker.

The new CGFA numbers came on the heels of a similar update by the Governor’s Office of Management and Budget (GOMB) and the Department of Revenue (DOR) in mid-April. CGFA’s $4.233 billion downward revision of net revenue for FY21 closely mirrors what GOMB/DOR projected, with only a $66 million difference between the two projections.

The overall effect of this pandemic has been a catastrophic drop in FY20 State general funds revenues. Many Illinoisans are no longer employed, and are not paying personal income taxes. Corporate income tax payments have dropped sharply. Sales tax revenues have been affected by the mandatory shutdowns of many places of retail business that serve goods, such as clothing and in-dining food, to customers. CGFA expects this drop will continue in FY 21.

The drops in FY20 and FY21 general funds revenues raise new questions about Illinois’ fiscal solvency and ability to enact a balanced budget. Fitch Ratings, a major New York credit-rating office, downgraded Illinois general-obligation debt from ‘BBB’ to ‘BBB-‘, the lowest ranking above junk-bond level, in mid-April.

Revenue numbers for April 2020. Like the estimates for FY20 and FY21, these numbers were also compiled by CGFA. They reflect the first full month of the stay-at-home orders issued by Governor Pritzker in compliance with national guidelines issued by the White House and the National Institutes of Health (Dr. Anthony Fauci and his NIH team) in line with the current COVID-19 coronavirus pandemic.

The numbers show substantial compliance with requests that Illinois substantially reduce its social and economic activities to reduce the rate at which this contagious virus spreads from person to person. Unfortunately, this has resulted in a sharp decline in Illinois general funds tax receipts, especially in the key areas of individual income taxes, corporate income taxes, and sales taxes. General revenues fell in April 2020 by more than $2.7 billion relative to the year-earlier month. Individual income tax receipts dropped by almost $1.98 billion as many Illinois residents were laid off and stopped paying income taxes on their payroll stubs. Corporate income tax receipts dropped by $482 million under circumstances of sharp declines in U.S. economic activity. Sales tax receipts fell $143 million as many key items of consumer retail activity, including shopping-mall retail sales, were sharply truncated or eliminated.

The sharp decline in April 2020 State of Illinois cash flow has renewed concerns about Illinois late bill payments, Illinois short-term debt as the State borrows money to meet essential and urgent cash needs, and long-term Illinois debts and non-debt obligations, including pension obligations. The April 2020 CGFA monthly report contains an extensive discussion of the status of the State’s credit rating, as well as the impact of the fiscal challenges that were raised against the State by the so-called “Great Recession” of 2008-09.

ISBE issues guidance for graduation ceremonies. The Illinois State Board of Education (ISBE) has issued coronavirus guidance to Illinois schools on graduation ceremonies for 2020 graduates. Working with IDPH, ISBE is encouraging Illinois school districts to hold electronic and virtual graduation ceremonies.

Other diploma options described by ISBE as being compliant with the guidelines include individualized ceremonies where each graduate visits the school separately; drive-through ceremonies; and drive-in ceremonies with collective attendance. In a drive-in ceremony, one graduate after another leave his or her motor vehicle to collect a diploma or credential. In all of these cases, participants in the ceremonies are instructed to maintain social distancing and wear gloves and masks.

A non-compliant, but allowed, option under the ISBE rules is that a school district can decide to postpone a ceremony until an undetermined future date. At some point in the future, large, in-person events will once again be carried out with personal contacts between participants. ISBE stated that they could not recommend this course. The Board does not know when traditional graduation ceremonies will be safe and secure; however, it is explicitly mentioned as a non-compliant option for school districts to consider. The ISBE graduation guidelines were released on Saturday, May 2.

Unemployment soars nationwide. The COVID-19 pandemic has created substantial economic damage throughout the United States. Over the past seven weeks, when counted on a nationwide basis, approximately 33.4 million unemployment claims have been filed. The U.S. unemployment rate hit 14.7% in April. There have been similar record increases in Illinois’ unemployment rates and in the caseloads of persons filing for unemployment insurance (UI) relief throughout the state.

In many cases, UI applications can be filed online. The applicant, after filling out a tedious application process, is successfully certified online and can look forward to soon receiving benefits. The Illinois Department of Employment Security (IDES) has used this online application process to pay out more than $2.2 billion in UI claims during the current 2020 unemployment spike. However, the online application process does not always work smoothly. Online applicants to IDES for UI benefits have the option of contacting an IDES call center for person-to-person assistance by phone, but applicants have told House Republicans that the phone lines into IDES continued to be jammed up by service demand right now and many people who require phone assistance are not receiving it.

Pandemic Unemployment Assistance for ‘1099’ workers. As mid-May approaches, substantial questions remain about the scheduled rollout on Monday, May 11 of an alternative Illinois unemployment insurance (UI) application process for a class of workers who are legally known as ‘1099 employees.’ These are workers who do not have an employer-employee relationship that triggers the assessment and collection of standard UI contributions. As a result of this lack of contributions and relationship, if persons in the ‘1099’ category lose their jobs there is no UI benefits waiting for them. The ‘1099’ category of contractual workers is often conflated, in the news media, with so-called ‘gig economy’ workers. Contractual gig-economy workers, such as drivers for Uber and Lyft, make up a large part of the overall ‘1099’ category. However, many contractors see themselves, and are seen, as professionals or semiprofessionals rather than gig economy workers. A relatively new category of non-gig-economy contractors includes people who design Internet Web pages and other electronic graphics for small businesses.

Aware that these 1099 workers need financial assistance too, Congress in mid-March 2020 enacted legislation within the Families First Coronavirus Response Act to expand UI programs in all 50 states. In late March, Congress enacted the Pandemic Unemployment Assistance (PUA) program within the CARES Act. These two pieces of legislation opened the door for independent contractors to apply for special COVID-19-related UI benefits.

Unfortunately, PUA-eligible workers check off several boxes that make then ineligible for standard Illinois UI benefits. Thus, whenever a worker in this category tries to sign up for UI, the system that gets their electronic application is programmed to automatically reject it. Furthermore, participants in this process have told House Republicans that the rejection process is completely anonymous and does not contain adequate online information on what the actual status of the rejected person is. IDES is instructing PUA-eligible people to apply, get rejected, and then wait until May 11 to apply for PUA benefits, but this is a tough message to convey to people who need immediate assistance.

The Department has, as part of its overall COVID-19 unemployment work, put together what they believe to be an adequate revised application process to apply for PUA benefits. It is not yet known how adequate this aid will be or whether it will be technologically rolled out in a user-friendly manner.

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