 During an Illinois Senate committee hearing Tuesday, Malcolm Weems,
associate director of Gov. Pat Quinn's Office of Management and
Budget, pegged the number the state owes, including corporate tax
refunds and other non-contract bills, at roughly $9.5 billion. The
entirety of the borrowed money would go directly to paying late
bills, according to Weems."We actually wanted it to be a bigger
number because our needs and our pressures are greater than the
$8.75 (billion)," he said.
But borrowing some is better than none, Weems said.
Quinn's office has maintained that because the state pays a 1
percent interest rate to vendors whose bills are more than 60 days
old, the more than $3 billion in interest from the borrowing would
wind up being cheaper. It was a line that Weems repeated Tuesday.
His comments come a week before Quinn is scheduled to deliver his
budget address to the Legislature.
The recent income tax increase would go to help pay off the debt
as well clear the backlog of bills. Sen. Matt Murphy, R-Palatine,
asked whether the projected $7.3 billion in new revenue this
calendar year could be used in place of borrowing.
"If the policy decision were made just on the math, the policy
decision were made that rather than borrow $8.75 billion, the idea
was to take the tax increase revenue and pay down this backlog of
bills, whether it's 12 months or 18 months ... couldn't that be
done?" Murphy asked.
Not without "decimating" state government, Weems said. But he
conceded that it was possible if one were just looking at the raw
numbers. To maintain state services like education and health care,
and pay down the backlog, it would take about 10 years, according to
Weems.
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He said that paying off vendors quickly helps the state get the
best deals it can from its contractors.
"What we're finding is we have vendors that choose to cancel
contracts, and they want to rebid them because they are going to ask
for a higher rate," Weems said. "We have some vendors that don't
want to participate, and they don't want to answer any of our
solicitations at all. They don't want to enter into a new contract
with the state. We've had some bigger vendors who have tried to get
us to agree in the contract to pay in advance."
Murphy and other Republicans, like Aurora Sen. Chris Lauzen, said
that adding debt to a state already crippled by a deficit doesn't
make financial sense. Instead, they want to use money from the tax
increase coupled with cuts to state services to get the state in
fiscal order.
Quinn will have to win over some GOP members in the Legislature.
Any borrowing needs a three-fifths majority to pass. Neither the
state Senate nor the state House of Representatives has enough
Democrats to muscle the plan through.
[Illinois
Statehouse News; By ANDREW THOMASON]
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