Democratic Gov. J.B. Pritzker on Wednesday rejected Republican U.S. Senate Majority Leader Mitch McConnell’s call for a pause in federal coronavirus relief aid to the states and support for allowing states like Illinois to file bankruptcy to unload heavy public employee pension debt.
Asked about the comments during a daily coronavirus briefing, Pritzker said McConnell is “certainly important to the process of getting things done in Washington, D.C.,” but noted that “there are an awful lot of senators on both sides of the aisle that disagree with him.”
“So, I’m hopeful that as a result of work that they’re doing, those (other) senators believe that states and local governments deserve and need additional support,” he said.
And seeking bankruptcy protection, Pritzker said, was not an option he has considered.
The governor’s remarks came after McConnell appeared on the nationally syndicated Hugh Hewitt radio show. The head of the Senate’s GOP majority reiterated his belief that there should be a pause to doling out additional federal aid to states to cope with a downturn in local revenues due to the pandemic.
“We’re going to push the pause button here because I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” he said.
McConnell went further during a discussion about states with large public pension shortfalls, saying he would be in favor of allowing them to “use the bankruptcy route.” Individual states do not have the power to file for bankruptcy to get out from under debt obligations, however.
“There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations,” McConnell said.
“My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that,” he said. “That’s not something I’m going to be in favor of.”
Senate Majority Leader Mitch McConnell of Ky., speaks with reporters after the Senate approved a nearly $500 billion coronavirus aid bill, Tuesday, April 21, 2020, on Capitol Hill in Washington.(Patrick Semansky/AP)
Illinois has a worst-in-the-nation $138 billion unfunded public employee pension liability. Some Republicans have discussed whether the state should ask the federal government to allow it to file for bankruptcy.
At present, such a move is prevented by the “sovereign immunity” clause against states afforded by the U.S. Constitution. It also would be fraught with complications, potentially increasing costs for states to borrow if investors were not protected for bonds taken out for things like road construction.
In Illinois, any effort to shed its government worker pension debt in bankruptcy could run afoul of the state’s own constitution, which contains a pension protection clause that treats benefits as a contract. The state Supreme Court has ruled that the clause prevents public pension benefits from being diminished or impaired.
Federal attention to Illinois’ unfunded pension liability was raised last week when Democratic state Senate President Don Harmon of Oak Park sent a letter to the state’s congressional delegation seeking $41.6 billion in federal aid, including $10 billion to help stabilize the pension system.
Pritzker sought to distance himself from the request this week. The state’s five GOP congressmen sent a rebuke to Harmon, saying Illinois’ Democratic leadership needed to reduce spending and address the pension issue rather than seek federal funds to deal with years of mismanagement.
Democrats in Washington, including House Speaker Nancy Pelosi, have said federal dollars for state and local governments have to be part of the next coronavirus relief package. The House is scheduled to vote this week to approve a measure to replenish the federal Paycheck Protection Plan aimed at helping small businesses keep workers on the payroll.
McConnell and Senate Republicans rejected Pelosi’s attempt to inject federal aid to states in the small-business funding measure. But she told Bloomberg Television on Wednesday that the Senate GOP leader had pledged not to exceed $250 billion in funding in the latest measure and “now, we are up to $480 (billion),” including assistance to hospitals and for enhanced coronavirus testing.
Pelosi called the current measure an “interim bill” and noted President Donald Trump took to Twitter on Tuesday to say “that he is ready to do state and local” funding in a new measure.
After urging passage of the enhanced payroll protection program, Trump tweeted, “After I sign this Bill, we will begin discussions on the next Legislative Initiative with fiscal relief….to State/Local Governments for lost revenues from COVID 19, much needed Infrastructure Investments for Bridges, Tunnels, Broadband, Tax Incentives for Restaurants, Entertainment, Sports, and Payroll Tax Cuts to increase Economic Growth.”
Democratic U.S. Sen. Tammy Duckworth of Hoffman Estates supported the small-business and hospital package awaiting a final House vote but said she was “extremely disappointed that this bill fails to help local and state governments that are facing unprecedented budget crises as a result of the COVID-19 pandemic.”
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“It’s absolutely critical they are included in the next package and that we provide them — and the first responders who we all rely on that they fund — with the supplies and resources they need to protect our communities during this public crisis,” she said in a statement.
The National Governors Association has sought $500 billion in federal assistance to the states. An earlier federal relief package provided $4.9 billion for Illinois state and local government, but it was limited to coronavirus-related expenses.
“I’ve spoken to multiple governors about working with their (congressional) delegations to make sure that they’re lobbying and getting them going to get something completed that will be of assistance to states,” Pritzker said Wednesday, calling it “vitally important.”
“I was on a National Governors Association call earlier today with many, many governors and literally every governor that spoke said the same thing — we need that state and local support,” he said.
