Cannabis and online sales taxes bolster Cook County, Illinois budget

Cook County, Illinois’ budget position for next year and beyond is on the rise with $ 1 billion in federal assistance for the COVID-19 pandemic and higher revenue projections .

Board Chairman Toni Preckwinkle on Thursday unveiled an $ 8 billion budget for 2022 that waives new or higher taxes and fees, continues on track with additional pension contributions and begins to spend $ 1 billion in county aid for the American Rescue Plan Act this year.

Stronger-than-expected tax growth – especially because of the online sales tax that went into effect in January and cannabis taxes – along with federal relief and keeping spending under control have filled a gap. $ 121 million forecast in the preliminary budget estimates last June.

“I am proud of our work to navigate this pandemic in a financially responsible manner,” said Cook County, Illinois, board chairman Toni Preckwinkle.

“I am proud of our work to navigate this pandemic in a financially responsible manner,” said Preckwinkle. Cook County is home to Chicago and is the second most populous county in the United States with over 5 million people.

New money borrowing of between $ 175 million and $ 200 million is slated for late next year as part of the county’s general obligation or sales tax pledge, CFO Ammar Rizki said during a budget briefing.

An order authorizing up to $ 375 million in bond repayments under a deal slated for this year that would be led by Loop Capital Markets LLC was introduced on Thursday and the county will continue to seek repayment opportunities. next year.

The fiscal landscape marks a sharp turnaround from last year, when the county grappled with a $ 410 million gap and uncertainty over the pandemic and its impact on the performance of tourism and others. economic taxes.

The package includes a general fund of $ 2 billion. The overall package spends $ 4 billion on the county health system and includes a $ 667 million investment plan. Spending has increased by $ 4.7 billion over the past decade, but this is mainly due to the expansion of the county’s Medicare program which has benefited from the federal expansion of Medicaid.

The budget sends an additional retirement contribution of $ 325 million to the pension fund in addition to $ 1.95 billion in additional payments made since 2015 with receipts for a sales tax increase. The additional payments are in addition to the approximately $ 200 million payment owed under a legal formula required by state law. Next year, an additional $ 20 million will go into a special pension stabilization fund.

Incorporating the additional contributions into the funding scheme puts the county on a path of full funding by 2046. Without the additional injection, the fund would be on track to deplete all assets by 2047. The county is working with his pension fund on legislation that would build higher payouts into law. The capitalization ratio stands at 63.9% against 53.3% if no additional payment had been made.

The county expects a fund balance of $ 506 million in fiscal year 2022 and plans to increase it to $ 595 million in 2026.

General fund revenues will increase by $ 85 million to $ 1.98 billion due to stronger than expected online sales as well as cannabis tax receipts, and increased income from property sales and the reopening of the judicial system.

The county’s finance team presented a longer-term budget view that shows structural clouds have lifted with revenues now expected to keep pace with expected spending growth, with sales tax growth in line being a key factor in this stability.

Gambling tax revenues join cannabis and online sales as the winners. “Those three things” have bolstered the “income side of the equation,” Rizki said.

Without the online sales tax now on the books, the county would have faced a structural hole of $ 261 million in 2026. The county also now believes the health fund can stay on track.

The finance team acknowledged that uncertainty remains given the summer’s rise in COVID-19 cases due to the Delta variant which has already hampered the return of some tourist traffic and business and travel activities. Congress. “It is certainly a big concern that some of this income… .might not come in and so we will have to adjust accordingly,” said Rizki.

The county will spend its $ 1 billion ARPA relief over three years in equal installments. The budget provides $ 100 million to cover lost revenue and some will be used to finance capital projects instead of borrowing.

The remaining $ 233 million for 2022 will be used to fund a range of community, mental health, cash assistance, housing and other programs aimed at pandemic recovery, with a focus on l ‘use of the money for one-off allocations in order to maintain the structural balance.

“We will make investments that will not weigh on taxpayers” beyond the five-year spending cut, said Preckwinkle.

S&P Global Ratings downgraded the county’s general bond rating on $ 2.8 billion in debt to A-plus, from AA-minus last year in January. The outlook was revised from stable to negative in May 2020. Fitch Ratings rates Cook County A-plus with a stable outlook.

Moody’s rates County A2 with a stable outlook. The county also has around $ 400 million in sales tax bonds that are rated AAA and stable by the Kroll Bond and AA-minus rating agency and stable by S&P.

Public hearings will follow this month with amendments adopted in late October and final adoption expected on November 18. The new county fiscal year begins on December 1.

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David A. Albanese