November 21, 2023 – With a deposit of $11.5 million, Illinois’ Rainy Day Fund reaches $2.005 billion.
In the worst days of the fiscal impasse in 2017, the Rainy Day Fund had just $48,000. That’s not enough to run the state for even 30 seconds – hardly enough to be of any use when the global COVID-19 pandemic struck.
“Whatever you think Illinois’ most important program is – funding our schools, policing our highways, caring for the elderly – that program is in jeopardy when a crisis strikes if Illinois has not built up a strong reserve,” Comptroller Mendoza said. “The bond rating agencies have been telling us this for years and part of the reason we got our 9th credit upgrade last week is because we are building up our Rainy Day Fund.”
A $2 billion reserve would run the state for about 15 days, which is much better than what we had, but not where Illinois needs to be. Nearly half of all states have at least a 50-day reserve.
Comptroller Mendoza has legislation, HB2515, that would require regular deposits into both the state’s Rainy Day Fund and the Pension Stabilization Fund. The bill will be reintroduced in next year’s legislative session. It would address the very problems rating agencies cite as the key to higher ratings, which means lower costs to state taxpayers.
The deposit includes interest income derived from fund balances – $7.743 million today – and the $3.75 million required monthly transfer required by the Comptroller pursuant to law.
“The upgrade of Illinois’ IDR to ‘A-‘ from ‘BBB+’ reflects the state’s ability to execute on significant planned reserve contributions and maintain improvements in budget management including normalized accounts payable, thereby improving the state’s overall operating profile,” Fitch Ratings wrote in its Nov. 7 upgrade of Illinois’ bond rating – the state’s 9th upgrade in the last two years.
