SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
To subscribe to Capitol Fax, click here.
*** UPDATED x1 *** Quinn to push borrowing for old bills again

Thursday, Nov 15, 2012

* From Monique Garcia’s Twitter feed

Quinn budget head Jerry Stermer said governor will soon present another”refinancing” plan to pay down $8 billion bill backlog.

That’s not a surprise, considering that both chambers now have Democratic super-majorities. The Republicans in both chambers have been dead-set against a borrowing proposal and it requires a three-fifths vote to borrow money, so nothing has been done.

The Senate came one vote shy of passing a borrowing bill when it had 37 members, so it’s probably a good bet that the chamber will be able to pass it if it comes up again. The House may be a different story. Lots of conservative Dems oppose borrowing, so even with 71 votes they’ll probably need at least a small handful of Republicans.

By the way, a bill has already been introduced by Rep. Esther Golar to borrow $4 billion for old bills.

*** UPDATE *** From the governor’s office…

We are focused on comprehensive pension reform to rescue the system, ensure public employees have access to benefits and prevent out of control pension costs from eating up core services like education and healthcare.

While the governor has always been interested in refinancing as an option to help pay down old bills, there is no new plan on this issue right now. The budget director today reiterated our interest in working with the General Assembly on this issue, which is not new.

- Posted by Rich Miller        

  1. - gg - Thursday, Nov 15, 12 @ 1:03 pm:

    This is a no brainer.

    I am all in.

  2. - Anonymouse - Thursday, Nov 15, 12 @ 1:20 pm:

    Irony alert: Saviano would’ve voted for it; Willis won’t.

  3. - jake - Thursday, Nov 15, 12 @ 1:23 pm:

    Since the state pays interest on late payments, and since the interest rate the state pays on late payments is higher than it would pay on the bonds issued to pay down the debt, this is a no brainer. It is especially so since the people to whom the state owes the money would rather have the money now rather than the interest later, while the people who would buy the bonds are happy to put out the cost of the bonds in order to get the interest now. The choice needs to be framed as borrowing from a willing lender (the bond market) or borrowing from unwilling lenders (vendors and service providers). They are both borrowing, but one is more accurately termed “stalling creditors”.

  4. - Small Town Liberal - Thursday, Nov 15, 12 @ 1:31 pm:

    Saving the state money in the long run and putting money into the hands of providers in the short term, seems like a win win to me.

  5. - Ahoy! - Thursday, Nov 15, 12 @ 1:32 pm:

    This is not new borrowing, it’s just changing who the lender is. The money is already being borrowed by small businesses, human service providers, hospitals and units of local government.

  6. - Fan of the Game - Thursday, Nov 15, 12 @ 1:44 pm:

    If the interest on the bonds is less than the interest on the payments, then you do it. It sucks to run a government that way, but you do it.

  7. - Rudy - Thursday, Nov 15, 12 @ 1:55 pm:

    Remind me–did the GOP articulate a reason (besides the 2012 election) for opposing this previously?

  8. - wordslinger - Thursday, Nov 15, 12 @ 2:20 pm:

    The only folks who don’t want this are those who are getting more juice — on a regular, monthly basis — in late payments.

    It will save the state a lot of money and pump a B-12 shot of capital into the economy in a hurry.

    The fact that we haven’t done it already in these times of historically low interest rates makes you want to scream in frustration.

  9. - S.Dolopoulos - Thursday, Nov 15, 12 @ 2:32 pm:

    If “conservative Dems” won’t support it, why would they expect any of the remaining Republican to do so?

    That is not a commentary on the nature of this bill, but an observation on the practicality of the politics behind it.

    Even if those Republicans are from fairly moderate districts, breaking ranks to vote in favor of a borrowing bill won’t likely secure their re-election in two years.

    If anything, doing so practically begs a primary challenge from the right. Good luck explaining how borrowing this money actually lowers costs, etc. in the long run while someone is hammering you with oversimplified ads about you “borrowing” even more money.

    And is you survive the primary, it’s not as though the Democrats will give you and your depleted resorces a free pass in the general (see: Pankau, Saviano, Mathias, Cole, Mortland, et al.)

    I hope we are entering a period of reconciliation, but it’s beginning to feel more like a period of self-preservation. That includes some of those “conservative Dems” and even a few of the new Dems from previously GOP-leaning districts.

    Be interesting to see what happens.

  10. - Rich Miller - Thursday, Nov 15, 12 @ 2:33 pm:

    ===why would they expect any of the remaining Republican to do so? ===


  11. - jake - Thursday, Nov 15, 12 @ 2:34 pm:

    The reason people have opposed it has to do with language rather than substance; that is, “borrow” is a dirty word politically, as in, “My opponent advocates more borrowing. Borrowing is what got us in this mess in the first place.” We have to get beyond this sloganeering and attack these issues on the substance. Wordslinger is right. In addition to what I wrote earlier, this move would also provide an economic stimulus–temporary to be sure, but at a time when we really need it.

  12. - S.Dolopoulos - Thursday, Nov 15, 12 @ 2:37 pm:

    @wordslinger nails it as usual. And for every one who wants the extra juice, there is another one who needs that check to keep going and providing services. Meanwhile, nothing changes. Very frustrating.

  13. - S.Dolopoulos - Thursday, Nov 15, 12 @ 2:39 pm:

    Rich, I’d like to think so. I’d even go as afar as adding “good”, as in “good governance”.

    One can hope.

  14. - jake - Thursday, Nov 15, 12 @ 2:39 pm:

    PS to last–Don’t expect anything coherent to come out of the Governor’s office on this. It will be all up to the legislators. The Governor will be sort of a demented Greek chorus on the sidelines, commenting (but mostly beside the point) as the process moves forward, and moving in to take credit if anything is accomplished. I would like to be proved wrong about this, but that seems to be his modus operandi.

  15. - soccermom - Thursday, Nov 15, 12 @ 3:14 pm:

    Sorry to get all mathy here, but if we borrow $4 billion from our vendors for one year at 12% interest, versus borrowing $4 billion from bondholders for 30 years at 6%, I think that, over the long run, borrowing from bondholders costs lots more.

    It’s kind of like paying off your credit card debt by taking out a second mortgage on your house. It helps reduce your monthly costs, but it’s going to cost you much more over the life of the loan.

    Now, if the plan is to continue indefinitely (like, for 30 years) with the extended payment cycle, then a bond issuance makes sense. Otherwise, this plan benefits vendors — who absolutely deserve to be paid! - at increased expense to taxpayers as a whole.

    So, not really a no-brainer.

  16. - soccermom - Thursday, Nov 15, 12 @ 3:16 pm:

    Although Word makes a good point: The systemwide economic impact of a $4-8 billion cash injection would be pretty major, and would offset part of the increased longterm borrowing costs.

  17. - Bourbonrich - Thursday, Nov 15, 12 @ 3:20 pm:

    @soccermom. We are going to borrow $4 billion every year at 12%. It is not a one off.

  18. - Rich Miller - Thursday, Nov 15, 12 @ 3:21 pm:

    soccermom, I think they’re looking at ten years with an interest cost of about a billion dollars. So, yeah, it would be more. But you’d fix the damage that late payments are doing to the economy. And that’s very real.

  19. - soccermom - Thursday, Nov 15, 12 @ 3:22 pm:

    And to be fair — seems like the rate for Illinois bond issuances would likely be closer to 3 or 4%. Could someone please do the math and figure out what the relative costs of the current “system” and a bond issue might be, just for grins?

    And here’s the $8 billion question: If we do this, can we stay on a 60-day payment cycle going forward?

  20. - soccermom - Thursday, Nov 15, 12 @ 3:23 pm:

    Bourbonrich - That assumes that revenues will never catch up to current spending. Is that our assumption?

  21. - Bourbonrich - Thursday, Nov 15, 12 @ 3:25 pm:

    @soccermon - Yes. I think the odds are better that revenues are more likely to decline than to increase.

  22. - soccermom - Thursday, Nov 15, 12 @ 3:27 pm:

    Rich - I’m not saying it’s necessarily the wrong thing to do. I’m just saying — aw heck, let’s run the numbers and figure out the true costs and the benefits.

    Is $4 billion today worth paying $1 billion over ten years? It’s a real question, and one that deserves a thoughtful answer beyond “it’s a no-brainer.”

  23. - Anonymice - Thursday, Nov 15, 12 @ 3:47 pm:

    ==but if we borrow $4 billion from our vendors for one year at 12% interest, versus borrowing $4 billion from bondholders for 30 years at 6%==

    Actually, if we don’t do the borrowing or have a big influx of revenue, the $4 billion we owe to the vendors will keep rolling over and we’ll keep paying the 12%. The people currently waiting to get paid will be replaced by others waiting to get paid. If we issue bonds and then get a big influx of revenue, we can pay off the bonds or some other debts. So the time period the debts will be outstanding should presumably be the same.

  24. - Ahoy! - Thursday, Nov 15, 12 @ 3:47 pm:

    Went through the bill and they did not specify a payback time, but believe a 7 year bond would be more favorable due to the total interest over the term of the bond. They would still be able to manage the annual debt service, would be around $675 million and would be a fiscally prudent, which might help sway some moderates.

  25. - LilLebowskiUrbanAchiever - Thursday, Nov 15, 12 @ 4:46 pm:

    @bourbonrich- You are wrong. Revenues have been increasing. COGFA monthly reports are a useful read.

Sorry, comments for this post are now closed.

* Happy Thanksgiving!
* *** UPDATED x1 *** Five unanswered questions
* *** UPDATED x1 *** Question of the day
* Caption contest!
* Crossing the line
* Moody's warns Illinois
* The Credit Union Difference
* *** UPDATED x1 - Franks responds *** Uh-oh
* Then and now
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Yesterday's blog posts

Visit our advertisers...







Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

* [Deal] Amazon slashes the price of its Fire Tablet, Fire TV Stick, Echo and other devices in Black Friday promotion
* Huawei Mate 8 officially launched in China, Kirin 950 inside
* SONY Xperia Z5 Premium Fingerprint Scanner Performance and Problems (Video)
* Microsoft Lumia 950 and 950 XL no longer available online in North America
* OnePlus 2 and OnePlus X now available without invites, plus cheap accessories
* If you hurry, you can get the OG Nexus 6 at $200 on Amazon, $280 on eBay
* Google offers massive Nexus 5X and Nexus 9 savings for Black Friday

* Scouting profile: Adam Engel
* Alex Avila will try to shed limitations with White Sox
* White Sox program provides kids real chance
* Johnson solid candidate for White Sox rotation
* White Sox sign catcher Avila to one-year deal
* White Sox sign catcher Avila to one-year deal
* White Sox sign catcher Avila to one-year deal


Main Menu
Pundit rankings
Subscriber Content
Blagojevich Trial
Updated Posts

November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005


RSS Feed 2.0
Comments RSS 2.0


* Governor faces challenges in move to block refu.....
* Gov. Bruce Rauner faces challenges in move to b.....
* Rauner faces challenges in move to block Syrian.....

* Mascoutah burglary victim shot in 1st night at new home
* Closing of 2 Illinois harness racing tracks opposed
* Landfill cleanup to idle Rockford area sledding hill
* Hunters find body of missing southern Illinois woman
* EXCHANGE: Augustana digitizing Hauberg glass plate images
* Rauner faces challenges in move to block Syrian refugees
* Illinois high court takes Moline company's tax break appeal
* Boone County jail inmate charged with attacking guard
* Chicago schools prepare lesson plan on teen's shooting
* Chicago Public Schools reverses special education cuts

* Rauner faces challenges in move to block refugees
* Vendor Payment Program suspended due to budget impasse
* Rauner pardons man found innocent of 1999 attack
* Springfield jobless rate falls again, to 5.1 percent
* Springfield police chief sees problems with body cam law
* Lawsuit challenges Illinois ban on marijuana campaign money
* Number of Illinois inmates released on parole climbing
* Bryce Benton circulating petitions to challenge Sen. Sam McCann in GOP primary
* Executive Mansion roof repairs nearing completion
* Candidates begin filing petitions for March primary election

* Review: Sociale in the South Loop
* Her Barbie was a lawyer. Now she defends victims' rights
* Meet the guy making money off your food scraps
* Anger, pain and calls for change in response to police video
* United, Delta bet on long oil slump

* In wake of dashcam video, Emanuel must navigate political minefield
* White House under holiday lockdown after man jumps fence
* Trevor Daley turning the corner at both ends of the ice
* Rauner faces challenges in move to block Syrian refugees
* Brown: Simeon basketball players bring their A-game to court
* 16 reasons every Blackhawks fan should be thankful on Thanksgiving
* Blackhawks cool off Sharks; Kane extends point streak to 17
* Four more Laquan McDonald police dashcam videos released
* President Obama: ‘Disturbed’ by Laquan video, grateful for ‘peaceful’ protests
* Black leaders call for Supt. McCarthy to resign

* Person arrested in connection with killing of 9-year-old
* Person shot in Elgin
* 1 dead, 2 wounded in North, South Side shootings
* 4 arrested in 2nd night of Laquan McDonald shooting protests
* University of Illinois marching band performs in Macy's parade
* Laquan McDonald shooting protest groups plan Friday march
* Cops: Man tried to lure, kidnap 9-year-old girl in South Chicago
* Teen dead, 4 others wounded in city shootings
* Woman dies in Chesterton fire
* Naval recruits get taste of home at Chicago Ridge Thanksgiving dinner

* Rauner faces challenges in move to block refugees
* Vendor Payment Program suspended due to budget impasse
* Eugene Robinson: The GOP's political correctness dodge
* Douglas Holt: Woman's protest of Trump was misguided, inappropriate
* George Will: Muzzling pet advice another case of free speech erosion
* Bernard Schoenburg: Josh Langfelder took father's advice on election petition signatures
* Rauner pardons man found innocent of 1999 attack
* Springfield jobless rate falls again, to 5.1 percent
* Michael Gerson: The Trump effect, still 'understated'
* Catherine Rampell: For millennials, first comes love — then what?

* Game Day Q&A: Unity coach Scott Hamilton
* Game Day Q&A: Arcola coach Zach Zehr
* Migut's sophomore success aided by veterans
* Big Ten football update: Big implications in final week
* MBB Sneak Peek: UAB opens Florida tournament
* Illini seek 'killer instinct' before tournament
* Statue at Wildlife Prairie Park adds to Peoria County's war memorials
* 48th Annual Turkey Trot
* Podcast: Champaign County States Attorney Julia Rietz 11-26-15
* Wednesday's highlights: Nottingham, Chargers get first win

* Packers don't get in Bears' way
* One hurt in Elgin shooting
* Informal hat and scarf giveaway makes Batavia warmer
* Arlington Heights hosts homestyle Thanksgiving for Navy recruits
* Lake Zurich Culver's feeds hundreds for Thanksgiving

* House lawmakers overcome hurdle on key tra...
* Rodney Davis talks funding with Bloomingto...
* The agency that fought Illiana gets a new ...
* Rep. Dold takes educational cruise down Ch...
* Lawmakers decry high turnover rate of VA h...
* CBD Oil, and politics
* Simon considering state Senate bid
* Killer Congressman Tom MacArthur trying to...
* Shutdown? State may not notice
* Rep. Bob Dold

* Letter: Sen. Durbin is right on refugee is......

* Opinion: Sen. Kirk must stand with crimina......

* ‘It’s beginning to look a lot like Christmas,’ several weeks ago!!!
* Snow Money
* Chicago Teachers Union. “If we strike, we do so to protect our children,” says Karen Jennings Lewis.
* Resign.
* Don't Let The Turkeys Get You Down
* “The Driver’s Side” – News From The Motorist’s Perspective
* IDOT Debuts Winter Weather Driving Tips Video
* Pot Dangerous? Mother's Testimony Says Yes [video]
* Happy Thanksgiving
* It seems like it’s everywhere, that video of the final moments of Laquan’s life

* Emergency Management Officials, National Weather Service Encourage Winter Preparedness - November is Winter Weather Preparedness Month in Illinois
* Keep Your Family Safe This Winter - November through February are leading months for carbon monoxide related incidents
* Governor Takes Bill Action
* Illinois Department of Labor Director Hugo Chaviano Awards Governor’s Award for Contributions in Health and Safety to the Illinois Refining Division of Marathon Petroleum Company LP
* State Regulator Elected Treasurer of Interstate Medical Licensure Compact

    Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller