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PAYING OFF LOAN EARLY WILL SAVE TAXPAYERS $82 MILLION

Wednesday, January 5, 2022 

 

SPRINGFIELD — Two years ahead of schedule, Illinois Comptroller Susana A. Mendoza has made the final $302 million payment on a $2 billion loan the state took out in 2020 to cover COVID-19 expenses. It’s estimated the early pay-back of the loan will save Illinois taxpayers $82 million in interest. 

Governor J.B. Pritzker, Comptroller Mendoza, House Speaker Emanuel “Chris” Welch and Senate President Don Harmon announced an agreement in May to use the state’s strong expected revenues to pay off the loan from the U.S. Federal Reserve’s Municipal Liquidity Facility (MLF) early, saving the interest money. 

Before the start of this fiscal year, the Comptroller was able to pay half of the loan in June. No federal stimulus money was used for repayment – just regular state revenues. 

“With this early repayment, we take another important step toward restoring fiscal stability and predictability to Illinois,” Comptroller Mendoza said. “I can’t stand seeing taxpayer money wasted on interest – that’s why paying off this loan early was so important for me.”  

“Illinois used to be known for kicking the can down the road, but today we’re restoring fiscal stability,” said Governor JB Pritzker. “Paying back this loan ahead of schedule achieves a level of fiscal prudence not seen in our state for decades. I applaud Comptroller Mendoza and our partners in the General Assembly for not only building fiscal stability, but saving millions of taxpayer dollars along the way.” 

“We promised steady stewardship even in uncertain times, and this keeps that promise,” said House Speaker Emanuel “Chris” Welch. “Just a few years ago, we had a bill backlog of $17 billion. Today, we are paying off our debts early, saving taxpayers millions of dollars, receiving our first credit ratings increases in decades and proving we don’t have to balance our budget on the backs of working families.” 

“I shudder to think where we would have been without these resources to keep our economy afloat,” said Senate President Don Harmon. “It’s a testament to the resilience of the people and businesses of Illinois and the responsible financial actions we’ve taken as a state that we have bounced back so quickly and are now able to pay it off early.” 

“Fiscal responsibility is absolutely vital for Illinois’ future, and paying our debts early is a strong sign of how seriously we are taking that obligation,” said House Majority Leader and Chief Budgeteer Greg Harris. “However, while we have made significant progress putting Illinois on sound financial footing, there is still work to do. I’m confident steps such as these will build a strong fiscal foundation for years to come.” 

The loan was scheduled to be repaid in three installments by December 2023. Illinois' revenues, especially corporate income tax and sales tax receipts, came in ahead of projections. Comptroller Mendoza used effective cash management strategies to put the state in a position to pay off the debt in its entirety early.  

The MLF loan was needed to cover state medical bills during the pandemic. But as of today, the state is caught up on its Medicaid payments with no additional borrowing in the state’s plans. The backlog of bills is down to $3.8 billion and the state is paying its bills within 15 business days, the quickest payment cycle in over 20 years, signaling the state is in a recovery mode compared to the budget challenges of recent years. 

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