States and local governments should prepare for fewer federal funds, higher borrowing costs and market volatility as a result of turmoil in Washington.
A debt-ceiling breach would cost states in terms of revenue, pension investment losses and increased borrowing costs. Even a fix at this point will likely lead to cuts in federal grants.
Illinois has received billions in federal relief money during the COVID-19 pandemic. But there will be no new rounds of aid from Washington after federal and state COVID emergency orders expire on May 11.