CHICAGO — Illinois Comptroller Dan Hynes Friday afternoon announced he would not sign off on Gov. Pat Quinn’s request to issue $500 million of general obligation cash-flow certificates to help pay down a growing backlog of bills, warning that the state can’t afford the additional borrowing.
The governor wants to issue up to $1 billion of certificates in two issues, beginning with the $500 million to meet cash-flow needs with billions of dollars in bills now overdue, but under state law the treasurer and comptroller must approve the financing. The proposed borrowing would mark the state’s third this year. It has $2.25 billion in certificates that come due before the end of the fiscal year on June 30.
“That is a historic amount of short-term debt and the state will risk default if that money is not repaid by June 10, 2010,” Hynes said in a letter to Quinn he released Friday at a news conference.
“Any additional short-term borrowing such as you now propose would further strain a state budget that can barely accommodate the currently scheduled debt service and critical ongoing payments our office must make, especially given the $900 million revenue failure your office has now projected,” he said.
The governor’s office has said the current fiscal 2010 budget faces $900 million of red ink. Quinn earlier in the week attempted to pressure Hynes to sign off on the borrowing, accusing him of playing politics with the state’s balance sheet.
Hynes is running against Quinn in the February Democratic primary in the governor’s race. Treasurer Alexi Giannoulias said he had not even yet seen any details of the proposed borrowing.
Hynes rejected Quinn’s assertion that the state can afford the borrowing because it expects more than $600 million in federal funds. The comptroller countered that the expected infusion of federal dollars has already been incorporated in cash management planning.
“Absent an additional revenue source dedicated to the repayment of any new notes, there is insufficient flexibility in the latter half of the year for additional debt service payments,” Hynes letter said. He noted that it is the current proposal he is rejecting, leaving open the door for consideration of a revised plan.