Illinois Comptroller Judy Baar Topinka last week slammed a legislative proposal to borrow $4 billion to pay down the state’s mammoth bill backlog, warning that the state couldn’t afford the new debt. She underscored the toll that the state’s cash crunch and existing debts have already taken on its credit rating.
“When you’re drowning in debt you don’t start applying for new credit cards,” Topinka said. “The rush of new cash may create a short term feeling of relief but it will make our situation worse, and cost our taxpayers even more, in the long haul.”
Topinka pointed to the rise in state GO debt to $27.5 billion at the close of fiscal 2012 from $7.6 billion at the end of fiscal 2002. The state also has $96 billion in unfunded pension obligations. She noted that the state has been downgraded four times by Fitch Ratings, three by Standard & Poor’s, and four by Moody’s Investors Service over the last four years.
Topinka testified before the House Executive Committee on a proposal to issue $4 billion of GOs to pay down the backlog of more than 168,000 bills totaling $7.1 billion. She testified that the state is slowly making a dent in the backlog through growing state revenue. “We are beginning to eat into this mound,” she told lawmakers.
Proponents assert that the state would simply swap one form of debt for another since the obligations are already owed and the state’s chronic lateness hurts its vendors including healthcare providers, not-for-profits, schools, and businesses.
Gov. Pat Quinn has previously proposed borrowing measures to pay down the backlog but he has not formally endorsed the latest legislative proposal. The committee did not vote on the proposal.
Lawmakers are currently meeting in their annual veto session through this week. They aren’t expected to address pension reform this week, nor attempt to override Quinn’s veto of a of gambling expansion package.
The governor and Chicago Mayor Rahm Emanuel said last week they are close to reaching agreement on a gambling bill that would include a casino for Chicago with tighter regulatory controls than the bill vetoed by Quinn.