CHICAGO – Illinois Gov. Pat Quinn outlined plans to spend $12.6 billion over the next six fiscal years on highway, bridge, and transit projects through a mix of federal, state, and local government funds but said more spending and borrowing for capital projects is needed.
The program is a follow-up to the state’s four-year-old $31 billion capital program known as Illinois Jobs Now although it relies on the funding reauthorization of $580 million for highways and $1.6 billion for transit from the prior program.
Quinn touted the new six-year program as a means to improve and expand the state’s transportation infrastructure while creating jobs and spurring economic activity. The program would improve more than 2,000 highway miles and 517 bridges. The plan also provides an infusion of funding for transit, local airports, and high-speed rail.
“This major investment in roads, bridges and public transportation will drive economic growth in every part of Illinois, and create tens of thousands of jobs,” Quinn said.
Larger projects include $475 million for the reconstruction of a major interchange in downtown Chicago and $76 million for a new bridge across the Mississippi River between Illinois and Iowa. About $92 million is earmarked for ongoing work towards building a new Illinois-Indiana expressway. Both states have passed legislation allowing for a public-private partnership.
In fiscal 2014, the plan allocates $2.24 billion for roads, $128 million for public transportation, $224 million for rail and $68 million for airport improvements.
Overall, roads would see an investment of $9.53 billion, public transportation would receive $1.81 billion, rail would receive $1.1 billion, and $159 million would go to airport projects. The program relies on $7.2 billion in “anticipated” federal aid and $1.9 billion in state revenues with funds from Illinois Jobs Now and local contributions covering the remainder.
Quinn is pushing the new program as lawmakers still must authorize a final $2.7 billion piece of the $31 billion program. He stressed that passing pension reforms aimed at reining in $1 billion in annual payment growth and $95 billion of unfunded liabilities remains his priority, but he’d like to pursue more investment in infrastructure before lawmakers adjourn.
“We also, I think need to have a debate before between now and the end of May on more capital, more investment on capital, more opportunity to issue bonds…we’d like to have more financing so we can do this program and more like it,” Quinn said. While project approval requires only a simple majority, borrowing authority requires a three-fifths majority.
Quinn previously announced a nearly $500 million spring construction season was underway financed in part with proceeds from an $800 million general obligation sale earlier this month.
The state anticipates issuing $2 billion of new debt annually over the next three to four years to wrap up funding for Illinois Jobs Now. The program relies on total borrowing of between $12 billion and $14 billion. Lawmakers approved a series of new and increased fees and taxes and expanded gaming in 2009 to boost general fund revenues to repay the debt.
The Democratic governor, who faces re-election next year, has highlighted progress made under his watch on infrastructure including the $31 billion program, the tollway authority’s new $12 billion partially bond-financed program, and a $1 billion clean water initiative.
Investors have in recent years demanded steep interest rate penalties on state bond sales as its seen it ratings tumble over liquidity and pension woes. The state saw spreads on the 10-year maturity in the deal’s tax-exempt piece come in at 141 basis points over the comparable top-rated municipal benchmark.
Standard & Poor’s rates the state A-minus and assigns a negative outlook, making it the lowest-rated state. Fitch Ratings assigns an A rating to the state’s $27 billion of GO debt, including the new issue, and has a negative watch. Illinois’ GOs are rated A2 with a negative outlook by Moody’s Investors Service.
The state intends to return to the market with a new-money negotiated GO sale of about $1 billion between May and July to finance capital projects, and a smaller sales tax-backed issue.