Quinn wants to borrow billions
MAUDLYNE IHEJIRIKA Staff Reporter/ email@example.com December 29, 2010 12:30AM
Updated: April 18, 2012 4:40PM
Gov. Quinn wants to borrow billions of dollars to pay down the state’s operating and pension deficits, a proposal some lawmakers say faces an uphill battle when they return to Springfield Jan. 3 for the lame-duck legislative session.
The governor is considering borrowing $15 billion to balance the state’s largest ever budget deficit — currently at more than $12 billion, and projected to reach by June 30 the amount the governor reportedly wants to borrow.
Quinn’s proposal is part of a package that would include raising monies to pay off the debt potentially through an income tax increase as well as such other possible venues as increased taxes on cigarettes and gas, although the governor has yet to specify numbers, according to some lawmakers.
“I can confirm that the governor has discussed this concept of a large borrowing plan with the Senate president,” John Patterson, a spokesman for Senate President John Cullerton, said Tuesday. “We’re not commenting on the idea because it’s just an idea. The president’s view is that we should take the responsible steps to pay our bills and I would note that the Senate did take action last year toward trying to solve the state’s budget problems.”
He was referring to the Senate’s passing of a bill that would have increased the state income tax for individuals from 3 percent to 5 percent, which failed in the House.
Quinn budget spokeswoman Kelly Kraft Tuesday said only that the governor is considering various options for dealing with the budget shortfall that has resulted from declining tax revenue, created a state backlog of unpaid bills from service providers, and led to subsequent cuts statewide by those providers in vital services for Illinois residents.
“Gov. Quinn’s plan includes . . . reducing spending, . . . responsible borrowing, and increasing revenues,” such as through a 1 percent income tax increase, Kraft said. “Nothing has been finalized. We continue to talk with legislators on both sides of the aisle.”
Some lawmakers, like State Rep. Lou Lang (D-Skokie), support the idea, a potentially multi-year debt bond premised on the supposition the state would save on the current interest it pays to providers as a penalty for late payments, and garner an attractive interest rate on the open market by attaching the dedicated revenue stream of new taxes.
Others, however, like Senate Republican leader Christine Radogno (R-Lemont), criticized the proposal.
“A discussion about state finances can’t just be about raising more taxes and borrowing more money,” Radogno spokeswoman Patty Schuh said.
Either way, with the Democratic-dominated Senate recently unable to scrape together enough votes to borrow $3.7 billion to pay this year’s pension obligation, any large-scale borrowing plan faces a tough road. And some watchdog groups are already sounding the alarm.
“Borrowing money for operating expenses is not only risky. It is fiscally reckless,” said Civic Federation President Laurence Msall. “The state’s credit rating is one of the worst in the United States. It is risky to try and borrow extraordinary amounts of money without having a comprehensive plan for stabilizing the state’s finances.”