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More credit is not what we need

Updated: January 3, 2013 6:25AM

When a family is drowning in debt and interest payments, the worst thing it can do is apply for new credit cards. The additional spending power may bring short-term relief and a false sense of security, but it ultimately will lead to financial collapse.

Similarly, with state government already drowning in debt and saddled with one of the lowest credit ratings in the nation, the worst thing it can do is take out another loan. It may make the state’s bill backlog look better for a few months, but it will dig us even deeper in the long haul.

Yet, legislation filed in the Illinois General Assembly session proposes to do just that. House Bill 6240 would authorize state government to borrow an additional $4 billion, and take on more general obligation debt than it has in any of the previous 20 years.

As I told the House Executive Committee during testimony this week, we simply can’t afford it.

To be clear, I very much understand the good intentions of this borrowing plan and appreciate the efforts of State Rep. Esther Golar (D-Chicago) to bring in new revenue to pay off state vendors that consistently wait months for the payments they’re owed.

As State Comptroller, I hear daily from not-for-profit and service agencies, schools, hospitals, small-business owners and others that are hurting because of prolonged state payment delays. Those vendors have provided a service but then are told to wait to get paid. Frankly, it’s unconscionable — and it needs to change.

But borrowing is not the answer — it is actually what created this mess to begin with.

Consider: The state ended its most recent fiscal year with $27.55 billion in general-obligation bonds, nearly four times what we had a decade ago. As a result, Illinois is ranked fourth-highest among states in tax-supported debt. With proposed additional borrowing, the state would pass New Jersey and carry the third-highest debt in the nation.

Like a consumer with damaged credit, taxpayers are paying the price. In fact, the nation’s three bond rating agencies have downgraded Illinois’ credit a combined 11 times in the last four years. With each downgrade, taxpayers are forced to pay even more in interest when the state borrows for road, bridge, and other construction projects.

It is time to cut up the proverbial state credit cards, keep spending flat and implement structural budget changes. As our economy grows, we will slowly pay down our bill backlog and regain our fiscal footing — and do it quicker, and at less expense to taxpayers, than we would to pay off new borrowing.

By taking that approach, we will ultimately return our state to a responsible payment cycle and bring much-needed relief to our vendors and taxpayers. I’m not saying it will be easy, but as we’ve seen, the “easy” route often has devastating consequences. We need to learn from experience and do it right this time around.

Judy Baar Topinka is the Illinois comptroller.

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