Illinois to issue $1.4 billion in general obligation bonds to pay
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[December 06, 2008]
CHICAGO -- As part of his plan
to manage Illinois' fiscal 2009 budget deficit of $2 billion caused
by the national economic downturn, Gov. Rod R. Blagojevich announced
Friday that his office posted up to $1.4 billion in general
obligation certificates late Thursday. This marks the first major
step in a short-term borrowing process that will help the state pay
bills from providers and vendors who are in urgent need of payment.
Blagojevich recently announced a four-pronged plan to manage
Illinois' $2 billion budget deficit. As part of that plan, the
governor has been working with Comptroller Daniel Hynes and
Treasurer Alexi Giannoulias on this short-term borrowing
transaction, which would immediately put cash into the state's
accounts so that the comptroller can pay more bills. With Thursday's
posting, the governor's office expects the transaction to close Dec.
17 with an immediate cash infusion.
national recession has negatively affected Illinois' revenue sources
and cash flow. Especially in this poor national economy, Illinois
needs to make sure that we can pay the businesses that provide the
state with the goods and services which help families in these tough
times. I am also pleased that Comptroller Dan Hynes and Treasurer
Alexi Giannoulias understood the urgency of the need to pay
providers and worked with us to get this short-term borrowing posted
in a timely fashion," Blagojevich said.
In addition to the state
receiving less revenue than the budget projected, the state also has
an uneven cash flow. This means that more dollars will come into the
state during March, April and May. The short-term borrowing will
allow the state to pay bills throughout the year as they come in,
rather than waiting for this spring, when additional money comes in.
While short-term borrowing will not solve the budget deficit, the
state needs to pay vendors and manage the uneven cash flow.
In May 2003, the state borrowed $1.5 billion to pay Medicaid
assistance, medical providers of long-term care, the refund fund and
state aid payments to K-12 schools. Short-term borrowing has been
used in other years since then to manage cash flow and ensure the
state's payment obligations are met in a timely manner.
Illinois is not alone in facing a fiscal 2009 budget shortfall
due to lower than projected revenues. At a meeting earlier this week
with President-elect Barack Obama and 48 of the nation's governors,
Pennsylvania Gov. Ed Rendell, chairman of the National Governor's
Association, said 43 of 50 states currently face budget deficits.
Blagojevich's plan includes three other components:
Continued belt tightening -- The governor has already taken
fiscally responsible steps by reducing the fiscal 2009 budget passed
by the General Assembly by $1.4 billion, ordering all agencies to
reduce spending by 3 percent, reducing the cost of core services and
decreasing head count. The state will continue to find efficiencies
and savings in the agencies through further reserves and spending
freezes while still providing Illinoisans with core services.
Emergency Budget Act -- During the Illinois General
Assembly's November veto session, the governor proposed legislation
to give him the authority to hold back in contingency reserve as
much as 8 percent of total appropriations and distributions for all
general fund spending, including agencies under the governor, the
State Board of Education, higher education, state pension funds and
funding to local governments. In addition to the rights granted the
governor, the Emergency Budget Act provides similar powers and
responsibilities to the lieutenant governor, attorney general,
secretary of state, comptroller and treasurer with respect to each
constitutional officer's own budget. Throughout December and early
January, the governor's office will work with legislators to refine
the language in the Emergency Budget Act to make it more agreeable
to all sides.
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Increased federal stimulus -- On Nov. 18, Blagojevich sent a
letter to U.S. congressional leadership and Obama's transition team
detailing the effects that the poor economic condition has had on
Illinois. The letter focused on the areas that the state has
identified with the greatest impact and requests more than $1
billion annually over the next three years. An infusion of federal
dollars would not only help to alleviate the projected revenue
shortfall for fiscal 2009, but also help Illinois stabilize its
weakening economy by putting dollars into the hands of consumers,
investing in infrastructure and ensuring the state can pay its bills
in a more timely manner.
This week Blagojevich met with
President-elect Barack Obama and 47 other governors to push for
consumer spending with dollars for programs like the Low Income
Home Energy Assistance Program, known as LIHEAP; the Special
Supplemental Nutrition Program for Women, Infants, and Children,
known as WIC; Temporary Assistance for Needy Families cash
assistance, known as TANF; and the extension of unemployment
insurance benefits -- all of which will have an immediate impact
on the lives of residents and stimulate the economy.
infrastructure and creates good paying-construction jobs.
Protects state services with direct
cash assistance, as well as a temporary increase in the federal
medical assistance percentage, the federal share of the Medicaid
health care program.
[Text from file received from
Illinois Office of
Communication and Information]