(Springfield, IL) — Illinois Treasurer Dan Rutherford and Comptroller Judy Baar Topinka can both agree on a plan to merge their offices, but short-term borrowing is a different thing.
Republicans opposed Gov. Pat Quinn‘s plan to borrow $8.75 billion to help the state pay off its debt of $9 billion to $10 billion. Quinn wants to borrow $2 billion in short-term loans to help pay the Illinois’ backlog of bills.
Any short-term borrowing must win the OK from both financial offices.
Rutherford, a Republican, met privately with Quinn, a Democrat, and his budget office staff. Rutherford said he told the governor he doesn’t approve of a multi-billion dollar borrowing plan, which would require repayment with interest at the end of 14 years.
“I told him I don’t support the $8.7 billion borrowing plan; 14-year payment ballooned at the end,” Rutherford said. “I said ‘I don’t support any of that stuff, but I will work with you on short-term borrowing, which I can either sign-off on that or not.’”
States were provided with about $80 billion from the federal stimulus fund, which provides an enhanced Medicaid match rate to hospitals and nursing homes if states make payments within 30 days. Since March 31, Illinois’ match dropped from 59 percent to 57 percent early this month. By July 1, the match will drop to 50 percent.
“We do not want to leave over $200 million in federal match on the table,” Quinn’s spokeswoman Kelly Kraft said. “We want to get this debt restructured, so we can take advantage of an extra $200 million that we could use for programs in our state. We want to get these bills paid. And the sooner we do that, the more match we get.”
The comptroller’s office estimates the state has $4.7 billion in unpaid bills as of Tuesday afternoon.
Comptroller’s spokesman Brad Hahn said Topinka has discussed with Quinn about taking advantage of federal dollars through Medicaid match. But at the moment, Hahn said Topinka doesn’t believe in short-term borrowing.
Lawmakers would need to approve the 2012 state budget at the end of session on May 31, so they only would have a month to pay off any short-term borrowing, Hahn said. Any short-term borrowing must be paid by the end of fiscal year on June 30, Hahn said.
“Regardless of the situation, Comptroller Topinka is always willing to sit down and have a discussion and look at options on the best long-term financial interests of the state,” Hahn said. “But she is certainly very hesitant on borrowing on any level, at this point.”
Quinn needs to win support from Republicans in both chambers for any borrowing measure, which requires a three-fifths vote. The governor and his office have discussed with both the treasurer and comptroller solutions to the state’s budget challenges, Kraft said.
“Our goal here, and I think everyone’s goal here, is to get our bills paid, and we want to come up with a solution so that we could restructure our debt to get our bills paid as quickly as possible,” Kraft said. “And so far, we feel that these discussions have been very constructive.”
Despite the personal and corporate income tax increase enacted in January expected to generate $7 billion for the state, Quinn called for borrowing to clear out the state’s pile of unpaid bills.
Rutherford said Democrat and Republican lawmakers in Springfield need to come together to resolve the state’s finances.
“I am cautiously optimistic that before this is all over at the end of May, that we will be able to have some kind of a reasonable effort on the finances of our state,” Rutherford said. “The two biggest sticking points will be the public pensions and workers’ comp.”
Lawmakers, meanwhile, have introduced proposals to reform the state’s public pension and workers’ compensation systems.
Diane S.W. Lee, Illinois Statehouse News