Illinois has cut its 2022 fiscal gap by $2.5 billion in an unexpected move as the state fared better than expected this year after the coronavirus pandemic hurt the economy across the country.
The cut will allow the state to start its shortfall for the year in July at $3 billion instead of $5.5 billion as was originally estimated, Illinois’s Democratic Gov. J.B. Pritzker announced on Tuesday, Bloomberg reported.
This move was unexpected as Illinois has been struggling financially since before the pandemic even began. Many states and companies have been negatively affected by the pandemic since businesses had to close and adjust to new guidelines.
However, the announcement from the governor’s office said that the state’s “economy performed more strongly than expected,” so Pritzker was able to pay off a $700 million loan the state owed the Federal Reserve.
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Illinois had to borrow from the Federal Reserve last year due to high interest rates the state was facing in its bond market, Bloomberg reported.
The governor says it will still be a tough year for the state’s budget despite the success in slashing the fiscal gap.
“There is no question that this budget will include painful choices, but as the effect of the pandemic diminishes over the coming months, the governor will continue to focus on economic recovery for the hardest hit,” Jordan Abudayyeh, a spokesperson for Pritzker, told Bloomberg.
“The governor will also continue to advance long-term structural budget improvements that continue the stronger fiscal trajectory Illinois was on before the pandemic, ” Abudayyeh continued.
The economy performed better than expected due to wealthier Americans keeping their jobs during the pandemic and paying their income taxes, Bloomberg notes.
Illinois still has the lowest credit rating among states as it continues to try to dig itself out of a financial crisis.