 The Democratic governor has already advocated borrowing $3.7 billion
to pay for this year's pension debt, but the Senate -- despite its
supermajority of Democrats -- has been unable to get it approved. So
a massive bond sale to cover unpaid bills along with the state's
obligation to its retirement funds may not bode well in a
Legislature that will have more Republicans come January.Experts
believe the deficit will top $15 billion by June, the end of the
current budget year.
Legislators said Quinn has not specified how much he wants to
borrow, and Quinn's office would not confirm that he's considering a
borrowing plan larger than the $3.7 billion plan to cover pensions.
"He's working on a variety of options," Quinn budget spokeswoman
Kelly Kraft said. "He's working with legislators on both sides of
the aisle to come to a solution to stabilize the budget."
Those include a 1 percent increase in the income tax, estimated
to raise about $3.1 billion a year, which Quinn has said would go
toward education funding and "responsible borrowing," Kraft said.
The state owes $3.7 billion to cover retiree pensions this year,
but Quinn has been unable to convince the Senate to approve a loan,
which he said would save billions of dollars in interest charges
over the years. The state would owe another $4 billion in the budget
year that starts in July 2011, and entered this fiscal year with an
unpaid-bill backlog of $6.5 billion.
Senate President John Cullerton has discussed a borrowing plan
with Quinn but is "encouraging the governor to focus on getting some
action in the House" on an income tax increase, said Cullerton's
spokeswoman, Rikeesha Phelon.
She said she was unaware of a specific number, but Cullerton's
office said Quinn has in mind a loan larger than the $3.7 billion
for pensions.
John Bradley, House Revenue and Finance chairman, a Marion
Democrat, said Quinn's people have floated a large-scale borrowing
idea.
"It's a moving target," Bradley said. "Everything's on the table
right now. Everything's being considered."
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Borrowing would make sense if the state gets a favorable interest
rate and can consolidate debt, similar to what consumers would do to
clean up their money situation, Bradley said.
Governments take out loans routinely on one-time construction
projects that have longevity, but borrowing to pay ongoing,
operating expenses is typically ill-advised.
Rep. Frank Mautino, D-Spring Valley, said such a loan would have
to have a much shorter term than a bond for a highway or bridge so
that carrying costs are less.
Mautino said it would have to be accompanied by a dedicated pot
of money to pay it back, such as an income tax increase. Quinn's
proposed 1 percent hike wouldn't be enough, he said.
An income tax increase won approval from the Senate in 2009 but
never got a vote in the House.
The Legislature returns to Springfield next week and has several
days remaining in the current session before a new General Assembly
is inaugurated on Jan. 11. The plan to borrow $3.7 billion to pay
this year's pension obligation passed the House but has stalled in
the Senate.
[Associated Press;
By JOHN O'CONNOR]
O’Connor is an AP political writer.
Copyright 2010 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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