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Pritzker faces pressure from Democrats, Republicans over shorting payments to nonprofits

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Thursday, June 25, 2020  |  Article  |  By Cole Lauterbach | The Center Square

Budget--State (8) , Governor (44)

(The Center Square) – Gov. J.B. Pritzker said Illinois isn’t “punishing” nonprofits by reducing their state payouts based on the federal payroll loans they’ve received.

Both Republicans and Democrats are pressuring Pritzker’s office to stop reducing or delaying state reimbursements to nonprofits, such as foster care providers and facilities that care for people with special needs, that had Payment Protection Program loans forgiven. 

“There’s no punishment involved,” Pritzker said Wednesday. “What we’re trying to do, with limited resources, as you know we’ve had a significant drop in revenue in the state as every state has because of COVID-19, we have to marshal our resources. When someone’s getting direct federal dollars to cover the very same expenses that would have been covered by the state, it seems logical to me for the time being to use those resources to cover other challenges that we have during this very difficult time.” 

As part of the federal CARES Act, Payment Protection Program loans are issued and then subsequently forgiven if the employer proves they spent the funds on payroll or other business expenses such as rent or utilities. 

The state is facing a revenue shortfall of $7.4 billion for the fiscal year that starts in July. Lawmakers passed a budget in May that allows Pritzker to spend more than the state ever has in a fiscal year, relying on federal borrowing and uncertain federal assistance.

The Department of Human Services and the Department of Children and Family Services have required nonprofits seeking reimbursement from the state to disclose how much they’ve had forgiven via a PPP loan. Refusing payment for that amount is, essentially shifting that federal aid into the state’s coffers.

Lawmakers at the state and congressional levels have taken exception to this. 

Illinois’ Republican Congressional delegation wrote to Pritzker on June 3 warning him about shorting nonprofits.

“Based on our understanding of new guidance issued by the state, these nonprofits will need to comply with the state reporting requirement in order to receive their expected payments from the state and risk a reduction of dollars awarded in current or future state contracts as a result of the PPP loan being forgiven in part or in whole,” the letter said. “To our knowledge, currently, no other state is requiring human service providers to report to the state on the status of their PPP loan or tying these loan dollars to state funding.” 

State Democrats on June 17 wrote Pritzker saying service providers have seen revenue shortfalls from other sources.

“We strongly urge you and your administration not to reduce any state funding to social service organizations because they have received PPP funds. While we recognize the state is facing budget constraints, the level of need for social services has exponentially increased during the COVID-19 pandemic due to unemployment, underemployment, food insecurity, housing insecurity, and other economic challenges," the letter said. "Social service organizations have stepped up to undertake the new responsibility of distributing millions in emergency funds to Illinois residents, despite receiving no additional funding to support this administrative burden. In addition, most of these organizations have experienced a severe decline in private donations.”