By Mark Fitton
Illinois News Network
SPRINGFIELD — Gov. Bruce Rauner plans to borrow nearly half a billion dollars for road, bridge and other construction money.
While Democrats don’t seem to be taking the Republican governor to task for borrowing when the state already has debt and credit problems, some of Rauner’s fellow small-government and free-market advocates say Illinois should be looking to avoid, not take on, additional debt.
Rauner’s administration this week announced Illinois expects to sell about $480 million in general obligation bonds in January to fund construction and pay other capital costs.
The bonds are to be sold Jan. 14, and the funds should be available in late January.
The governor’s office said continuing appropriations are in place and there are “sufficient dedicated revenues in place to cover the payments.”
Rauner, speaking to reporters Monday in Chicago, said the bond issue is needed.
“Absolutely, yes,” the governor said. “If it were to cover operations or an operating deficit, I would say no. I’ve been opposed to that from Day 1.
“This is for construction (and) construction is long-term benefit, and we should tie the financing for it to the nature of the expenditure,” he said. “Short-term spending should not be covered by long-term bonds, but infrastructure — roads, bridges, major construction of buildings — that should be done by bonding in many cases.”
“Despite the lack of a budget and in spite of some of the political leaders being relatively hostile to economic growth, we need to grow our economy, (and) infrastructure is critical. It’s very appropriate that despite everything we continue to invest in our infrastructure, and bonding is part of that,” Rauner said.
A spokesman for House Speaker Michael Madigan, D-Chicago, didn’t object to this bond issue but poked the Rauner administration for its timing.
“It’s about time,” said Steve Brown, Madigan’s spokesman. “I guess the governor’s staff has finally figured out it’s time to do something about our infrastructure.”
On the opposite end of the spectrum is Chris Edwards, an economist with the Cato Institute, which describes itself as libertarian think tank that supports free markets and limited government.
“Illinois is the last state you’d want to go further in debt,” Edwards said. “Illinois has the lowest credit rating (of all states) among the main agencies, which means its cost of borrowing is higher than other states that run a tighter fiscal ship. … Illinois’ debt per capita is already twice the national average, and Illinois has the most-underfunded state pension plan in the country.”
Edwards argues that taking on additional debt amounts to pushing the tax burden onto already heavily laden future generations.
Illinois has no overall budget in place for the current fiscal year despite being halfway through it, and it is spending at a pace to put it an estimated $5 billion in the red for fiscal 2016 as it pays for primary and secondary education, debt service and costs mandated in continuing appropriations and in court actions.
Illinois current stack of unpaid bills sit at $3.9 billion, according to the state comptroller’s office, which also has said the figure could hit $8.5 billion by the end of fiscal year 2016.
The state’s long-term debt picture includes an estimated $111 billion in unfunded pension obligations.
The city of Chicago and the Chicago Public Schools system also are in deep financial trouble and looking to Springfield for help.