Thursday, June 9, 2022
PEORIA – Illinois Comptroller Susana A. Mendoza announced Thursday she has deposited another $320 million into the state’s Rainy Day Fund, bringing the total in that long-neglected fund to $751,438,569.39.
“The first year I took office in 2016, the Rainy Day Fund had withered to about $60,000 – not enough to run state operations for 30 seconds,” Comptroller Mendoza said. “I salute Governor Pritzker and the legislators who voted for this responsible budget that is reviving the Rainy Day Fund.”
Bond rating agencies have cited Illinois’ shoring up of its Rainy Day Fund as one of the reasons they have raised the state’s credit rating this year. Rainy Day funds exist to help states weather rough patches. During the bull markets of five to six years ago, many states seized the opportunity to shore up their Rainy Day funds, and thus were well-prepared to endure the shutdowns of the COVID-19 pandemic.
But not Illinois. The state found itself in the middle of a two-year budget impasse during that time in which the Rainy Day Fund was raided to pay bills by the previous administration. That kind of irresponsible budgeting cost the state eight credit downgrades in the two years before Comptroller Mendoza took office.
As the rating agencies have given Illinois six credit upgrades since June 29, 2021 – the first upgrades in over 20 years – here is some of what they said about the importance of shoring up the Budget Stabilization Fund, also known as the Rainy Day Fund:
• S&P Global Ratings on May 6: "The upgrade reflects what we view as improvement in the state's financial flexibility and monthly revenue reporting transparency, continued timely budget adoption and elimination of the bill backlog, as well as recent surplus revenues being used to promote what we view as longer-term financial stability … as well as a $312 million proposed contribution by fiscal year-end to the budget stabilization fund (BSF) that would increase the fund balance to more than $1 billion or 2.2% of the fiscal 2023 budget...”
• Fitch Ratings on May 5: “The upgrade to 'BBB+' reflects fundamental improvements in Illinois' fiscal resilience including full unwinding of pandemic-era and certain pre-pandemic non-recurring fiscal measures, meaningful contributions to reserves … The 2022 revised and 2023 enacted budgets also deposit just over $1 billion into the state's budget stabilization fund (BSF), which had been essentially zeroed out since fiscal 2017.”
Comptroller Mendoza worked with Rep. Michael Halpin, D-Rock Island, and Sen. Elgie Sims, D-Chicago, to introduce House Bill 4118 this session that would require automatic payments into the Rainy Day Fund and the Pension Stabilization Fund. In addition to the one-time $1 billion infusion into the Rainy Day Fund for the fiscal year that begins next month, the final budget includes $45 million a year for the Rainy Day Fund, starting in FY ’24.
“That’s a good start, but we have a long way to go to get the Rainy Day Fund to where the experts say it needs to be.” Comptroller Mendoza said. “In this fall’s veto session I will be asking the General Assembly to take up HB 4118 again to require larger annual contributions to both the Rainy Day Fund and the Pension Stabilization Fund going forward.”
Comptroller Mendoza was in Peoria this week to visit the independently owned Alwan Pharmacy, where owner Mike Minesinger told her how her office’s prompt paying of state bills these days helps his business and thanked her for the payments from the state’s cannabis tax funds the General Assembly approved to help critical-access pharmacies around rural and downstate Illinois.