CHICAGO - The Regional Transportation Authority is considering taking out a short-term loan if Illinois fails in the next few weeks to catch up on $160 million of matching sales-tax dollars it owes to the agency.
"We have had encouraging conversations with the Illinois Department of Transportation and Office of Management and Budget and are hopeful they will send the funds in the next couple of weeks," said RTA chief financial officer Joseph Cosello.
As a backup in case the funds are not forwarded, the RTA board at a meeting last week authorized Costello to seek out a cash-flow loan of up to $200 million. The agency would first consider a one-year unsecured bank loan or a line of credit. A short-term issue in the tax-exempt market is further down on the list of options.
For every $4 collected from the RTA's share of regional sales taxes, the state provides a $1 match. The authority submits invoices for the matching funds monthly. The state currently is six months behind, having failed to forward any funds for the current fiscal year that began July 1. The state has lagged 30 to 60 days behind in the past, but the current delay "is pretty unusual," Costello said.
The delay comes as the transit agency is grappling with sluggish sales tax collections and funds it receives from a recent increase in Chicago's tax on real estate transactions. A sales tax hike and the real estate tax were included in a transit bailout package approved early last year by state lawmakers. The RTA's current $2.6 billion budget does not anticipate any growth in the sales tax.
The RTA is the latest to complain about Illinois' problems in paying its bills in a timely fashion. Faced with a record backlog of $4 billion, the state last month sold $1.4 billion of general obligation certificates to speed up payments.
Some officials, like Illinois Comptroller Dan Hynes, have warned that the borrowing provides only a temporary salve as revenues now coming in must be set aside to repay the notes, all of which mature before the current fiscal year ends June 30. That could result in a mounting backlog in the coming months.
The state's level of overdue bills is just one in a series of fiscal pressures it faces. Illinois has a roughly $2 billion budget deficit and expects investment earnings to fall, and its mammoth unfunded pension liabilities continue to grow.
Fitch Ratings downgraded the state to AA-minus from AA last month and Standard & Poor's put the state's AA credit on negative watch. Moody's Investors Service left Illinois' Aa3 rating intact but stripped the notes of their top MIG-1 marks, souring most broker-dealer interest in them.
State lawmakers have cited the fiscal mess as one reason for their attempts to remove Gov. Rod Blagojevich from office. Blagojevich, who was arrested on federal corruption charges last month, faces the start of his impeachment trial in the Senate Monday. A Blagojevich spokeswoman said state officials "are working with the RTA on the delay" but added that problems remain with getting caught up on bill payments even with the short-term borrowing proceeds in hand because of sluggish revenue collections.
