Borrowing or cutting, what clears Illinois’ backlog?

By Benjamin Yount
Illinois Statehouse News

SPRINGFIELD — For the upcoming year, Illinois lawmakers are weighing whether to pay bills with borrowed money or not pay businesses and local government money the state owes them.

However, if the state borrows the $6.2 billion for its bills, Illinois may have another mountain of debt in a few years.

Democrats are pushing the plan to borrow $6.2 billion in order to pay some of Illinois’ $8.2 billion in past-due bills.

Republicans say lawmakers have to stop borrowing and start cutting spending if Illinois is ever going to pay its bills and live within its means.

Comptroller Judy Baar Topinka, who actually writes the checks for the state’s bills, said spending money now is not the solution.

“The basic restructuring has not been done; the cuts have not been made. The budget has not been brought back in line, which has to be basically flat,” said Topinka.

Topinka said Illinois is still spending more than it is taking in. She did not offer an amount to be cut from the budget, but she did say the $7 billion in revenue from the largest income tax increase in the state’s history, has been committed.

“It will be gone, and in four years it will be gone completely unless the Legislature wants to make it permanent to underpin what again is excessive spending,” said Topinka.

However, Gov. Pat Quinn’s budget director David Vaught, said the tax increase was never designed to pay the backlog of bills, rather the revenue is to pay for pensions and general spending.

What it does is take us down to a normal payment cycle,” said Vaught, who added that even borrowing is not a solution for addressing the backlog of bills.

Quinn and Vaught originally had wanted to borrow $8.7 billion, but the governor’s office now says they are “supporting” the proposal to borrow $6.2 billion.

Vaught estimates Illinois will have to “manage” about $2.5 billion in bills even after borrowing.  After that, Vaught adds, Illinois’ economy is going to have to grow.

“What we gotta do in (fiscal years) 12, 13, and 14 is address these longer-term spending pressures,” said Vaught. “Three percent growth in spending needs to match up to 3 percent growth in revenues to maintain a balanced budget.”

Medicaid spending and pensions, alone, are growing at a much faster pace than 3 percent a year, Vaught said. In fact, Illinois would like to trim Medicaid growth to 6 percent a year, he said, adding that he didn’t have a target for pensions.

That kind of math has state Sen. Dave Luechtefeld, R-Okawville, asking Democrats: “Where’s your plan to say that all of a sudden this borrowing plan is going to work, that this borrowing plan will pay off (our bills)?”

State Sen. John Sullivan, D-Rushville, who is trying to shepherd the borrowing proposal through the General Assembly, said the plan is to craft realistic budgets and pay the state’s bills.

“How it’s different is the fact that we are doing a revenue-generated budget. We’re anticipating what our revenues are and are spending from that basis,” said Sullivan. “We’re going to have to live within our means.”

But even that anticipated revenue is raising eyebrows. The Civic Federation’s Laurence Msall said the governor’s proposed budget of $35.4 billion is $2.4 billion out of balance. Msall blames “increased appropriations and overestimated revenue.”

The Civic Federation, a nonpartisan organization that researches the quality and cost-effectiveness of government services in Illinois, has been a loud advocate of cutting state spending and avoiding more debt.

A vote on Sullivan’s plan is not known at this time.

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