* Gov. Pat Quinn went off on Comptroller Dan Hynes today, claiming that his rival in the Democratic primary was dragging his feet on approving a $500 million short-term borrowing plan. Quinn also claimed that Treasurer Alexi Giannoulias had signed on…
“I’m ready to go, Alexi Giannoulias is ready to go, it’s time for Dan Hynes to stop dragging his feet and tell his people to sit down with our budget people,” Quinn said. “Now to be lollygagging along and meandering along instead of getting the job done is inexcusable. The people of Illinois expect every constitutional officer to do his or her job without politics and this is very important.”
“I talked to my budget director on Monday and on Tuesday, and I said, ‘What is the problem here with the comptroller’s office?’ ‘They’re still studying the matter.’ I know personally from my own experience as state treasurer it takes about an hour, maybe a half hour, to get this done. Now let’s get it done for the people.”
The only problem is that Treasurer Giannoulias hasn’t signed off on anything and hasn’t even seen the proposal…
“We haven’t seen anything from the governor’s office yet,” said spokesman Scott Burnham. “We haven’t been given any documents and if and when that happens, we’ll review it and make a decision based on the merits. The treasurer has previously expressed concerns about continuing to borrow, the state can ill afford to go into debt, but we also have a backlog of bills to health care providers that provide critical services.”
Oh, for Pete’s sake. I’m told Quinn’s office just reached out to Giannoulias’ office today.
You can listen to the audio of the governor’s rant by clicking here.
The governor has long been irked at Hynes for daring to run against him in the primary. Whatever. That’s politics.
But Quinn’s temperament really needs to be questioned when he does something as goofy as this. I mean, did he not think anybody would check out his story? What is wrong with him?
*** UPDATE *** It’s even worse than I thought, and I thought it was pretty bad.
Back in October, Gov. Quinn was talking about borrowing $900 million short-term for healthcare and college scholarships. Behind the scenes, however, that number fluctuated wildly almost day to day and finally settled on $500 million.
But that’s not the only thing that fluctuated. There are two kinds of short-term borrowing, failure of revenue and cash-flow. For weeks, Quinn wanted to do a failure of revenue bond, but then about two weeks ago he changed to cash-flow, so all the work that had been done by the attorney general’s office to make sure all the legalities were met was, at that point, for naught.
And it gets worse.
The governor’s office was apparently unable to provide the attorney general’s office with a list of expenditures for this fiscal year that was separate from last fiscal year. It’s too complicated to get into here, but the AG, for legal reasons, needs a separate list. Instead, after some back and forth, the AG’s office was told they’d have to get the numbers themselves from the comptroller’s office because the governor’s office couldn’t do it. That’s just bizarre and completely unprecedented.
And it gets worse.
The governor’s people gave conflicting accounts to the attorney general’s office about how much federal stimulus money was expected, but hadn’t yet arrived - the whole reason for the cash-flow borrowing plan. The accounts given by Quinn’s office varied by about $200 million.
And it gets worse.
Late Monday, Quinn’s office gave the AG a deadline of 6 o’clock Tuesday night to approve the borrowing plan - without the numbers and other information AG Madigan’s office needed to certify the borrowing as legal and proper.
Then, sometime yesterday, the AG’s office asked the governor’s people if the comptroller and the treasurer had given their approval. The AG’s folks were told that the treasurer had signed off - something we now know was untrue.
The problem, of course, is that the attorney general cannot act until both the comptroller and the treasurer approve the borrowing, so the 6 o’clock Tuesday deadline was absolute nonsense.
The governor’s office is planning to do a much bigger borrowing plan early next year to help the state catch up on its $4.5 billion in past due bills, so the interest and financing costs of this $500 million proposal seems a bit unnecessary in that context. As one person described it, this is like taking out a $25 payday loan when your house is being foreclosed. I think I may have an idea what may be going on here, but I think I’ll wait on that and fill in subscribers later in the week.
In short, this appears to be a complete foul-up from beginning to end and the governor and his people have displayed a gross lack of competence and truthfulness.
But, other than that, everything is fine.
*** UPDATE 2 *** From the governor’s office…
The source told you the Governor’s just reached out today to discuss short-term borrowing with the Treasurer’s office: Talks have been underway between the Office of Management and Budget and Treasurer’s staff, and Comptroller’s, for weeks on this issue.
State Treasurer has not signed off on borrowing plan yet: The Treasurer’s office has not been an obstacle to the plan going forward and has expressed an open mind about approving the short-term borrowing.
The sentence above was probably inartfully worded. The reaching out was a formal contact of the treasurer’s top attorney. As for the second part, saying the treasurer has an “open mind” is not the same as saying, as the governor did today, that the treasurer “is ready to go.” In fact, it’s completely different. More distortions.
*** UPDATE 3 *** This is kind of a long update, but it supports the attorney general’s office account. A quick e-mail from the comptroller’s office…
The Governor’s Office has proposed at least 4 different borrowing ideas in the last 3 weeks.
The Governor’s office has yet to satisfactorily explain specific details of the plan or how we can pay back another $500 million on top of the $2.25 billion we’ve already borrowed and the current $4.4 billion backlog (we also have to pay back $276 million to the rainy day fund).
We’ve asked the Governor’s office to tell us which of the outstanding bills he wants paid — $250 million would go to Medicaid (doctors, hospitals and nursing homes already are being paid within 30 days under the federal stimulus). That leaves $250 million to pay a backlog of $4.4 BILLION. The Governor’s office says agree to the borrowing, we will give you the details later. Well, since the plan keeps changing by the day, how can we do that? He’s telling vendors their problems will all be solved with this borrowing. They won’t be solved. It will just further delay payments because we will have another $500 million we will have to pay back before the fiscal year ends on June 30.
We’ve worked closely with the Gov’s office and his agencies to prioritize critical payments and will continue to do so. In fact, we recently paid more than $20 million the Gov’s chief of staff asked to be paid.
And here’s a timeline of events, according to the comptroller starting on October 27th. By the way, “IOC” means Illinois Office of the Comptroller” and “OMB” means “Governor’s Office of Management and Budget”…
Quinn emerges from leaders meeting and tells reporters he wants to borrow $900 million to keep state government afloat through the lean winter months. Says the traditional slowdown in tax collections between November and February could cause the backlog to grow even larger. “It’s a cash management device,” Quinn said. (Bloomington Pantagraph, Oct. 27, 2009) “You need to make sure we manage our cash” (Associated Press, Oct. 28 from Chicago Tribune) Says it will be paid back before the end of the fiscal year (Chicago Public Radio Oct. 28, 2009) Of the $900 million some $250 million would be dedicated to Medicaid (Illinois Issues Oct. 27)
Quinn says state will run out of money before the end of the year without emergency borrowing, says state can short term borrow nearly $1 billion for only 1 percent interest (Channel 7/ABC . Oct. 28, 2009)
Two weeks later……….
Nov 10, 2009
OMB officials make first telephone contact with IOC regarding borrowing. Indicate that they intend to issue $900 million in short term notes under “ failures in revenue” meaning a 30 day notice must be published with a corrective plan addressing said failures, in accordance with state law. Suggests possible two phase loan of $450 million each directed to MAP grants and Medicaid and other unspecified priorities. Law permits borrowing to be paid back over 12 months. IOC indicated that MAP grants were not due for payment until March or April and asked if plan was to reserve money until payments due. No response.
Nov 12, 2009
OMB Bond Director meets with IOC staff. Failures in Revenue borrowing discussed and OMB states intent to publish 30 day notice/ Corrective Plan by following day in order to finalize loan in late December. IOC expresses concerns about payback plan and asks for information on what bills will be prioritized under plan. $200 million in Map grants, $250 million in Medicaid referenced. Group health care also mentioned but no dollar amount. OMB provides tentative schedule of other bond sales planned during FY10.
Nov 18th, 2009
Bond Director calls IOC. Says Failures in Revenue borrowing no longer planned due to difficulties in projecting revenues/spending in FY 11. Wants limited borrowing of $250 million to be directed solely toward healthcare providers. Money must be paid back at end of June 2010. IOC asks questions about plan details and expresses concern with repayment given $2.25 billion in existing loans to be paid back between March and June. No deadline referenced.
Nov 19th, 2009
Bond Director calls again. Apologizes and says new plan is to borrow $250 million for Medicaid and $250 million more for general purposes. IOC again asks for details about where $250 million should be directed given $4.4 billion in unpaid obligations. IOC also again expresses concerns about repayment in context with existing loans. No deadline referenced. IOC asked about Quinn plan to bail out RTA/CTA and whether that was part of borrowing plan. Response was that another $10 million had been promised to Transit entity but when IOC said that we already owed RTA $180 million in unpaid obligations, there was no response.
Later that day Quinn announces $ 70.8 million in new spending allocations from lump sum appropriations.
Nov 23rd, 2009
Bond Director calls again to discuss concept of selling state payables, known as factoring, to financial institutions to provide relief to vendors who may qualify for such a program. Prior borrowing plan only mentioned in passing.
Dec 1st, 2009
Bond director says concurrence needed on borrowing by the end of the day to meet self imposed OMB Christmas Eve deadline for finalization. Only prior reference to any critical dates was in context with abandoned 11/10/2009 borrowing plan. No prior communication as to significance of 12/1/2009 as decision date. Attempts by IOC to once again obtain specific plan information unsuccessful.