SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
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        


25 Comments
  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? ===

    Governance?


  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.


* New Quinn ad sparks Dem criticism
* Beware October
* Question of the day
* Quinn signs millionaire's tax referendum
* Today's map
* Thanks, but I'll pass
* Roberts appointment questioned
* Poll: Rauner has 14-point lead
* Today's rant
* *** UPDATED x2 *** Quinn campaign goes up with first TV ad of the season
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Yesterday's blog posts

Support CapitolFax.com
Visit our advertisers...

...............

...............


Search This Blog...

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

Search the 98th General Assembly By Keyword

          
        * Battery experiment: survive a vacation trip with no chargers but a battery pack (updated)
        * 10 cleverest Lumia shots of the month
        * Microsoft Announces Windows Phone 8.1 Update 1, Which Will Greatly Expand Cortana’s Footprint
        * Windows Phone 8.1 Update brings Cortana to new markets + new features
        * iPhone gets first free app for encrypting voice calls
        * Instagram launches new Bolt app in 3 markets outside US
        * New “Fake ID” exploit allows new types of malware on Android?

        * Freakbox Project Android TV Box Unveiled For $149
        * Samsung’s Smartphone Market Share Drops In Q2
        * 7 Must-Have Networking Apps to Boost Your Social Media Marketing
        * Amazon Tries To Justify Their Dispute With Hachette
        * Mac Mini 2014 Model Referenced In Apple Support Document
        * Apple Reportedly Acquires Podcast App Swell
        * PlayStation 4 Last of Us Remastered Now Available (video)

        * White Sox cruise after thrashing Tigers in seventh
        * Noesi looks to wrestle win away from Tigers
        * White Sox 11, Tigers 4: Slugging Soria during seven-run seventh
        * White Sox cruise after thrashing Tigers in seventh
        * Stolen base overturned by Tigers' challenge
        * Rodon to be promoted to Class A on Wednesday
        * Avisail on track to return to action this season


        Main Menu
        Home
        Illinois
        YouTube
        Pundit rankings
        Obama
        Subscriber Content
        Durbin
        Burris
        Blagojevich Trial
        Advertising
        Updated Posts
        Polls

        Archives
        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

        Syndication

        RSS Feed 2.0
        Comments RSS 2.0
        WordPress

        Loading


        * Breaking down bullying - Kane County Chronicle..
        * Quinn Not Worried about Latest Poll Numbers..
        * Leaders want more protection for aquifer - Hera.....


        * Illinois officials identify man killed by police
        * Illinois boy meets Coast Guard rescuers again
        * $1.2 million may go to family of teen shot by cop
        * Group files appeal in term limits decision
        * Chicago committee OKs naming plaza for ex-mayor
        * NCAA proposed settlement raises medical questions
        * Illinois to ask voters about taxing millionaires
        * Judge: Need more time to consider NCAA deal
        * Chicago Transit Authority reports drop in crime
        * NCAA proposed settlement raises medical questions

        * Emails raise questions of politics in Quinn's anti-violence program
        * Quinn OKs ballot question on tax hike for incomes over $1M
        * Lawsuit against Quinn back in court in October
        * Illinois to ask voters about taxing millionaires
        * Illinois patients to docs: 'What about marijuana?'
        * Illinois State Fair manager fined by ethics commission for accepting free beer tickets
        * Sangamon County on its own for road salt
        * Sangamon County on its own for winter road salt
        * Lawyers will push to speed up pension reform ruling
        * Quinn says state EPA will block PCBs from Clinton landfill

        * These six numbers tell Tribune Publishing's future
        * Home theater rooms doing double duty
        * Regulators oust CEO, president of National Republic Bank
        * Chicago committee OKs naming plaza for former Mayor Jane Byrne
        * McDonald's: Regulator says it's a 'joint employer'


        * Cheap shots  don’t help
        * Sanctions reject Putin’s meddling
        * City’s strict limits on medical marijuana sites go up in smoke
        * Berrios’ kin risk injury for right to crowd payroll: Mihalopoulos
        * Aldermen advance anti-sweatshop ordinance after awkward debate
        * Chicago telephone tax to rise by 56 percent to shore up pensions
        * Deadlocked committee delays vote on City Council budget analyst
        * Man killed, two teens wounded in Near West Side shooting
        * 3 shot on Near West Side
        * Chicago cop wins $540K suit vs. sergeant accused of taunting him


        * City Council showdown on watchdog power looms
        * Police: Teen flees Southwest Side kidnapping attempt
        * Man killed, 7 people hurt in shootings
        * Aldermen setting cannabis dispensary regulations
        * 3 rescued from Lake Michigan after storm overturns sailboat
        * Lawsuit: Plastic surgeon illegally used woman's photos, labeled them 'cocaine nose'
        * Man charged with murder after victim dies 10 days after Palatine beating
        * Masked intruders break into Aurora home and injure three residents, police say
        * Chicago man found guilty of 3 killings in 2011 outside Chatham bakery
        * 86-year-old won't be charged in concealed carry shooting, prosecutors say


        * Authorities Investigating Downtown Bomb Threat
        * Authorities Investigating Downtown Bomb
        * Governor Approves 'Millionaire's Tax' As Advisory Referendum
        * Jane Byrne closer to getting memorial
        * Christian Co. Shooting Leaves Man Dead, Officer Wounded
        * Excavation Finds Courthouse Where Lincoln Worked
        * State Fair Officials Fined For Violating Gift Ban...For Beer Tickets
        * Inspector General Finds Old Metra Practice Could Lead To Fatigued Conductors
        * Exoneree Diaries: "You've got anger issues, Dad."
        * Clout On The Business Side of Medical Marijuana


        * Our Opinion: MacArthur Boulevard Association’s success worth replicating
        * Lawsuit against Quinn back in court in October
        * Quinn OKs ballot question on tax hike for incomes over $1M
        * Sangamon County on its own for road salt
        * Illinois State Fair manager fined by ethics commission for accepting free beer tickets
        * Me Inc. offers plenty of dividends
        * Quinn says state EPA will block PCBs from Clinton landfill
        * Regulators say Illinois doctor faked pot paperwork
        * Illinois communities scramble to find road salt
        * New law expands state Holocaust Commission


        * SIU student earns outstanding dissertation honor
        * William Barger
        * Bonita Davis
        * Letha Johnson
        * Coy Halfacer
        * Ernie Reynolds
        * Judith Price
        * Josephine Fletcher
        * Virginia Reno
        * Doris Neal


        * Palatine man faces murder charge in punching death
        * How the Route 53/120 extension could be funded
        * Arlington Heights teen ends Jeopardy! run
        * ‘Moving day' could be here at Wrigley Field
        * Dawn Patrol: Boy reunites with rescuers; Palatine man charged with murder in punching death

        * What Does Representative Schakowsky Usuall...
        * Jan Schakowsky tries minimum wage - Politico
        * Hispanic Caucus Calling On President To Si...
        * Rep. on immigration: "I think the presiden...
        * Luis Gutierrez Gives Up the Ghost - News 6...
        * Rep. Gutierrez: Obama Could Grant Amnesty ...
        * Rep. Luis Gutierrez: Executive Action Coul...
        * Dem Rep Brags He's Working With Obama To G...
        * Gutiérrez: 'I Think We Can Get 3 or 4, May...
        * Gutiérrez heads to White House to talk bor...

        * Senator Durbin & Leading Congressional Dem......
        * Senator Durbin & Leading Congressional Dem......
        * Senator Durbin & Leading Congressional Dem......
        * Senator Durbin & Leading Congressional Dem......
        * Senator Durbin & Leading Congressional Dem......

        * How Partisanship Could Save Iran Diplomacy......

        * Illinois Judges Foundation awards scholarships, raises funds for future charitable endeavors
        * Whats Happening With the Whitney Young Library
        * Meeting On Future Of Chicago's Dyett High School
        * Group Files Appeal In Term Limits Decision
        * Audience At Chicago Community Meeting On Future Of Dyett High School
        * NLRB Finds McDonald's Liable For Actions Of Franchisees; Fast Food Movement Applauds
        * The Battle of the Crater
        * Sunday reads.
        * Arthur Goldstein. Blaming tenure is a fool’s game.
        * Tuesday: The Return of Helen Shiller To City Government?


        * Pat Quinn’s Reality Check
        * Governor Quinn Signs Legislation to Give Public a Voice Regarding Millionaire Tax for Classroom Education - Law Establishes a Statewide Advisory Referendum on Nov. 4 Ballot
        * DOI Calls for Health Insurers to Bar Discrimination Based on Transgender Status or Gender Identity - Insurers Are Instructed to Remove Exclusions of Coverage Based on Gender Identity in Plans Offered Under ACA
        * Hoy Op-Ed on Immigration
        * Governor Quinn Reminds Drivers to Take Caution in Work Zones, Directs State Agencies to Redouble Efforts to Protect Public and Workers - Encourages Public to Increase Vigilance Following I-55 Tragedy




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