Pritzker pitches Illinois bonds to investors in New York

[April 18, 2023]  By Greg Bishop | The Center Square

(The Center Square) – Illinois went to bond buyers in New York Monday asking for loans to cover a variety of spending programs.

Gov. J.B. Pritzker and other state officials were in New York previewing $2.45 billion in bonds the state is selling. Illinois Director of Capital Markets Paul Chatalas said they’re looking to go to market Wednesday.

“The biggest is the capital piece for Rebuild Illinois and other capital projects,” Chatalas said. “We have a taxable series that will fund the pension acceleration portion. We have an IT portion and then we are looking to do a refund for savings as the market allows.”

The bonds’ maturity dates range from 2033 to 2048. What interest rate taxpayers will have to pay back bond buyers is unclear.

Pritzker told bond buyers the state has increased taxes and paid down other debts.

“We broadened the sales tax in Illinois to cover online retail,” Pritzker said. “We closed some corporate loopholes that really were unlike any other state and so we brought ourselves in line with several other states.”

Pritzker also discussed the state’s revenue from increased motor fuel taxes and other driving fees to have infrastructure projects “shovel ready” for when matching federal tax funds are provided.

The state’s recent credit rating upgrades were touted during the presentation. Illinois has seen eight credit rating upgrades in recent years, but it is still tied for the worst credit rating in the U.S. with New Jersey.

Wirepoints President Ted Dabrowski said the massive inflow of $188 billion of federal tax dollars in COVID-19 relief to both the private and public sector in Illinois helped.

Illinois officials discuss bonds with buyers in New York Monday - State of Illinois

“The good news is, is that if you’re a bond holder, you’re in a much better position because Illinois’ financial condition as far as repayment of debt to bond holders has improved,” Dabrowski told The Center Square. “But I think there’s a big disconnect between bondholders and what happens to ordinary people in Illinois.”

One of the state’s looming debts is retired public employee pensions. Pritzker said there’s still work to do on funding the state’s pensions, but that the $140 billion unfunded liability only takes a portion of the budget.

“As long as that percent of the budget remains at 20% or below, it’s manageable for the state,” Pritzker said. “So it’s not something to panic about, or needs massive structural change.”

Dabrowski said Illinois is an outlier as pensions in most other states only eat up about 5% of their budgets.

“The pension problem is being downplayed but it is a massive problem and it will continue to eat at Illinoisans and their taxes and the economy for a long, long time,” Dabrowski said.

Dabrowski said the state is not equipped for a possible recession down the line.

“Illinois is one of the nation’s least prepared states for an economic downturn,” Dabrowski said. “And the state has done nothing about the country’s worst-pension crisis, which will worsen under a downturn. Considering Gov. Pritzker and the Assembly's history of reform avoidance, it's likely that any significant downturn will cause them to raid residents' wallets yet again.”

Greg Bishop reports on Illinois government and other issues for The Center Square. Bishop has years of award-winning broadcast experience and hosts the WMAY Morning Newsfeed out of Springfield.