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Borrow, cut and defer

Wednesday, Oct 28, 2009

* Gov. Pat Quinn is a well-known champion of veterans rights and benefits. Today, for instance, he’s announcing a new “Veterans’ Cash Stars & Stripes” lottery ticket.

But the Pantagraph just noticed something about the state’s veterans scholarship program. It’s no longer being funded

In trying to shift as much money as possible to its biggest scholarship program, the state this year stopped reimbursing universities for giving veterans free tuition.

This summer, with the Illinois Student Assistance Commission facing a major cut in funding, the commission decided to shift almost all of its scholarship money to the need-based Monetary Award Program. But that meant programs like the Illinois Veterans Grant were shorted.

Veterans in Illinois still get free tuition at state schools. But the state won’t be reimbursing the universities for providing veterans a free education like they have in the past.

Meanwhile, the governor wants to borrow more money

Gov. Pat Quinn wants to borrow another $900 million to keep state government afloat through the lean winter months.

With the state already months behind in paying its bills, Quinn said the traditional slowdown in tax collections between November and February could cause the nettlesome backlog to grow even larger.

“It’s a cash-management device,” Quinn told reporters following a meeting in the Capitol with legislative leaders.

Actually, it’s more than just a cash-management device

Quinn said the borrowing could be used for MAP [scholarship] funding, but he’s not concerned scholarships will be shorted.

“I’m very confident we’ll have the money for the scholarships,” Quinn said.

Radogno said it was clear in the meeting that the short-term borrowing will cover the extra MAP grant costs.

“We have committed to it, and it has to be funded,” Radogno said.

The Tribune explains how it would work

Lawmakers might put the borrowed money into a special pot that would be used to pay state health-care costs, generating potentially another $400 million in matching federal funds. That also would free up money elsewhere to pay for the scholarships in Illinois’ Monetary Award Program.

The situation is increasingly dire

(T)he state already has borrowed $2.25 billion to shore up its budget and has pushed off payments on another $3.7 billion in backlogged bills

Quinn also wants legislative approval to borrow a billion dollars from special state funds.

Will Hynes sign off? We’ll know soon enough…

The state comptroller and treasurer must approve a deal. A spokeswoman said Comptroller Dan Hynes had not heard about the plan. Treasurer Alexi Giannoulias said through a spokesman that funding higher education and paying backlogged bills will likely outweigh concern about continued borrowing.

Quinn said he expected no opposition to the December loan, including from Hynes, his opponent for the Democratic gubernatorial nomination in February.

* Related…

* Back to borrowing

- Posted by Rich Miller        

43 Comments
  1. - Skirmisher - Wednesday, Oct 28, 09 @ 9:55 am:

    Well, this citizen will never under any circumstances cast his vote for any person of either party who votes to borrow one more dollar to fund state government. It is the height of irresponsibility and I am sick and tired of public irresponsibility.


  2. - Anonymous - Wednesday, Oct 28, 09 @ 9:56 am:

    Aren’t veterans receiving very generous GI Bill education benefits under the new federal legislation? Would it make sense for the state to charge them tuition, so that the federal government winds up paying for it?


  3. - wordslinger - Wednesday, Oct 28, 09 @ 9:58 am:

    There’s a slowdown in tax collections November through February? That seems counter-intuitive. With the holidays and gas bills, those are my, and I suspect many people’s, biggest spending months.

    I doubt if Hynes can refuse him on this. The money’s needed, obviously. I can’t see how he could wear the jacket for not signing off.


  4. - Secret Square - Wednesday, Oct 28, 09 @ 10:08 am:

    “Aren’t veterans receiving very generous GI Bill education benefits under the new federal legislation?”

    They probably are, but I believe the GI Bill has a time limit (you have to use those benefits within 10 years after your discharge) whereas the Illinois Veteran’s Grant can be used indefinitely. My husband used the IVG to complete his college education more than 15 years after he left the service. I’m glad he was able to do that before the state started stiffing the universities :-)


  5. - Inish - Wednesday, Oct 28, 09 @ 10:08 am:

    It is a promise made to every Illinois citizen that joins the Armed Forces from this state. It is unrelated to the GI Bill- which is also in a serious backlog of payment. The Post 9/11 GI Bill just started effective August of this year and is flawed and only eligible to those who ahve served since 9/11. Currently there are four different GI bills in place depending on how and when you served. The Illinois commitment to provide tuition to armed service members is unrelated - and for alot of people the promary reason they joined the service. It would be a PR disaster to cut it mid stream.


  6. - VanillaMan - Wednesday, Oct 28, 09 @ 10:10 am:

    OK Dan - milk this!
    You wanted a real opportunity to use your position as Comptroller to steer opinion. This is your chance.

    Giannoulais? This is your chance too.

    So guys, take your time and let this thing fester into news and campaign opportunities. Demonstrate your fiscal maturity and opinionate about the current fiscal crisis effecting us. Drag your feet and demonstrate the kind of issue-milking our president has shown on Afghanistan. Keep this in the news, boys!

    Quinn cannot just sit there on this. This is on his watch. The longer this thing is news, the worse he looks. Make him suffer.

    Keep Quinn repeating that line - ““I’m very confident we’ll have the money for…” He makes himself look downright delusional when he says these kinds of things. Totally out of touch. He sets himself up for a knock down on the campaign trail. He is confident we’ll have money? Who is he yanking? Keep the Governor saying he is confident while the rest of us wonder which planet he is living on.

    Will all of this harm taxpayers? Considering the hole we are in, not really. Instead of being six feet under, we’re already ten. What’s another foot if it means changing the delusional, unproductive state leadership in this government?


  7. - SIUPROF - Wednesday, Oct 28, 09 @ 10:10 am:

    Illinois could tap into the new federal GI Bill by simply amending our law to require the use of the federal benefits first. The way the federal bill works, Illinois’ benefit is just a bit more generous, so veterans are choosing to use the Illinois benefit. Even if we changed our law to only pay for the difference, it would save the state universities millions.


  8. - Secret Square - Wednesday, Oct 28, 09 @ 10:12 am:

    –slowdown in tax collections November through February–

    Must be income and/or property taxes they are referring to. By November most counties have finished collecting property taxes, and most people who owed income taxes for the previous year have paid up. Then in Feburary income tax returns for the new year start coming in.


  9. - Speaking at Will - Wednesday, Oct 28, 09 @ 10:13 am:

    I can’t comprehend this borrowing…I think its because I am still stunned by how awful Andy McKenna’s six minute video was….


  10. - wordslinger - Wednesday, Oct 28, 09 @ 10:16 am:

    Secret, not a big point, but the state doesn’t collect property taxes anymore. And most income tax is clockwork through withholding on individuals. I would suspect sales and utility tax collections would be up in the winter.


  11. - VanillaMan - Wednesday, Oct 28, 09 @ 10:18 am:

    Excuse me, but when will someone start pointing out how Illinois businesses owed billions are being hurt by this administration?

    Voters won’t like knowing that businesses are going under, jobs are being lost, because Illinois is being ran by deadbeats who will not pay their bills.

    With each little trickle of “someone’s not getting their freebie”, opposition has a chance to tell voters the big picture of fiscal disaster set upon us by the incumbants in power. It isn’t just about veterans or universities not being paid - it is about how this state is broke and in need of a major political and governmental overhaul.

    If voters think they have to be a veteran to get pinched, then it is time for the opposition to point out that everyone is being pinched and that the incumbants have to be shown the door, now, to stop the damage being done to our institutions and our citizens.


  12. - D.P. Gumby - Wednesday, Oct 28, 09 @ 10:23 am:

    Rumor mill saying that state will cancel state university employee’s tuition discount and state eye and dental benefit to fund MAP. I don’t see how that bite would do anything, but everyone w/ those benefits panics these days.


  13. - Leave a Light on George - Wednesday, Oct 28, 09 @ 10:27 am:

    Can’t help but notice the difference today between us and our neighbor on the west shore of the big river. While our gov annouces a deisre to borrow more the Missouri gov is set to announce more cuts.


  14. - Secret Square - Wednesday, Oct 28, 09 @ 10:37 am:

    - the state doesn’t collect property taxes anymore -

    You’re right, my bad. Revenue approves or adjusts each county’s property tax multipliers, and that’s about it.

    Are most sales tax collections sent in right away, monthly, or just quarterly? If it’s the latter, it could be that sales tax revenue from the height of the holiday season doesn’t get into the state’s hands until March 1 or so.


  15. - Louis Howe - Wednesday, Oct 28, 09 @ 10:48 am:

    Unfortunately, once Gov Quinn brought into a Borrow and Spend budget he gave up the high ground in the political battles with the legislature. Can Madigan and Company continue playing this Borrow and Spend game out through next November?


  16. - Pre - Wednesday, Oct 28, 09 @ 11:15 am:

    How did they come up with $900 million? Why not an even billion?


  17. - Anonymous - Wednesday, Oct 28, 09 @ 11:17 am:

    Anon 9:56, PLEASE get another handle!!!


  18. - Niles Township - Wednesday, Oct 28, 09 @ 11:17 am:

    Hynes has to be careful here. He already came dangerously close to using his office for political purposes just a short time ago when he refused to release money.


  19. - dupage dan - Wednesday, Oct 28, 09 @ 11:24 am:

    The boil that is the budget of this great state has come to a head. What will push this over the limit? When will this boil burst? When does the s#!t hit the fan? I thought the state gov’t was precluded from borrowing, essentially printing $. I understand there may be ways of doing it - of course, it’s happening now so there must be a way. Is there a way for someone to file in court to block more borrowing? Or do we wait for the bond rating to tank and no one will lend to the state anymore?

    In the words of the great philosopher, “sheeesh”.


  20. - Bill - Wednesday, Oct 28, 09 @ 11:29 am:

    It is not a political purpose to try to save the state from another Quinn smoke and mirrors borrowing scam. It is good government. His approval is needed by law to put some kind of check and balance on an out of control governor. That is obviously the case here.


  21. - Will County Woman - Wednesday, Oct 28, 09 @ 11:35 am:

    Re: vet scholarship…
    Glen Poshard sounded the horn about this issue two months ago, back in August, and stated this his school would make sure that vets attending his school would not be affected. I don’t recall any other state university/college presidents going into a hissy fit about the vets the way that so many did about MAP.

    It is my understanding that National Guardsmen are not entitled to federal GI Bill benefits. I could be wrong but I’m guessing this vet scholarship was for returning Illinois National Guardsmen.

    I wonder if the University presidents and professors (i.e., B. Joseph White) who make very handsome salaries would be willing to take a pay cut in the interests of needy students. hmmm…. I’m guessing not. But, it’s interesting how everyone else has to poney up, though.

    I would like to know why Quinn needs more money considering he just borrowed in July/August? Did he miscalculate state fiscal needs that bad? Why didn’t he care enough about back logged bills back in July/August to borrow enough back then?

    Instead of hi-jacking Hynes’ cemetery legislation under bogus pretenses, just so that he could create another useless task force/commission/panel, maybe Quinn should have just gotten the borrowing right the first time? This just underscores why Quinn is not fit to be elected governor in his own right. He makes too many bad calls/decisions that have an adverse consequences for the state. This is just another example of how he has put himself, and his incessant need for media attention (e.g., through the cemetery task force), ahead of the state’s needs and well-being. His priorities have not been right practically since he got the governor job.

    Quinn administration political hiring has gone on unabated.

    Dan Hynes should sign off on the loan, and Quinn should give up his quest to be elected governor in his own right.

    Seriously Quinn announced last week he was running for governor, but refused the talk about the state’s fiscal crisis. Instead he talks about how his heart is ours. I really don’t know how anybody could take him seriously as governor at this point.


  22. - Bill - Wednesday, Oct 28, 09 @ 11:40 am:

    Shorting the veterans scholarships is not new. The GA and Gov routinely underfund these scholarships by millions of dollars. When the money runs out the colleges are on the hook for the rest. They usually run out of money around February. The law says veterans go free regardless of appropriation. It is just another way to cut higher ed. funding.


  23. - Will County Woman - Wednesday, Oct 28, 09 @ 11:48 am:

    Thanks for the clarification, Bill. That explains why there was no hue and cry from the college/university presidents on this.

    And, just for the sake of my own clarification, I wasn’t suggesting anything negative about Poshard.


  24. - Will County Woman - Wednesday, Oct 28, 09 @ 12:21 pm:

    @ Leave a Light on George
    There’s more than corn in Indidana (too)…
    Governor Mitch Daniels over der in Indiana is reportedly sitting on a $1 billion surplus. In addition to having previous political/government experience, Mitch Daniels was also a CEO in the private sector. He understands politics and he understands bottom lines. Indiana is lucky too.
    just sayin’.

    For Quinn supporters…
    Quinn just clearly does smaller offices better. The governor’s office is too much for him to handle. I’m not suggesting that he’s bad person, I am just suggesting that he is bad in the office he currently holds.


  25. - Secret Square - Wednesday, Oct 28, 09 @ 12:32 pm:

    WCW, isn’t ONE of the reasons Daniels is sitting on that $1 million surplus the fact that Indiana has (gasp) a higher income tax rate than we do?


  26. - Secret Square - Wednesday, Oct 28, 09 @ 12:34 pm:

    Scuse me… $1 BILLION surplus (insert your choice of Carl Sagan accent or Dr. Evil laugh).


  27. - Emily Booth - Wednesday, Oct 28, 09 @ 12:36 pm:

    I guess the state could stop buying us pens and toilet paper. :) Sweeping and mopping the floors doesn’t happen too often, anyways.

    They really need to take a look at the leases. We have an unused parking lot that’s been leased to the state for the past several years. The taxpayers have been paying for a vacant parking lot.


  28. - Vote Quimby! - Wednesday, Oct 28, 09 @ 12:42 pm:

    Wouldn’t this money have to be paid back before the end of the current fiscal year? Where is that money coming from….or is this just to get through the primary?


  29. - steve schnorf - Wednesday, Oct 28, 09 @ 12:49 pm:

    Cash flow borrowing is an appropriate response to cash flow problems, which are not uncommon in the late fall and early winter months. As long as it’s paid back timely (and it always has been) it is a valuable tool.

    Unfortunately, cash flow problems are aggravated when the state routinely spends more than it takes in.


  30. - Will County Woman - Wednesday, Oct 28, 09 @ 12:49 pm:

    Secret Sqaure, possibly. I am not enitrely opposed to a tax increase. But, I think Quinn needed to have made the pitch for it a lot better than he did. Instead of being so heavy-handed about his proposed tax increase and insistent upon making it his first line of defense, he should have gone above and beyond on cutting his administration costs. I think had he done that and other things, people would have been far more receptive to his tax hike and he would have had it by now.


  31. - Budget Watcher - Wednesday, Oct 28, 09 @ 12:54 pm:

    The reason for borrowing is fairly simple. The extra federal stimulus money that we’re currently getting has contingencies based upon paying some Medicaid providers within 30 days of receiving their medical bills. If the state doesn’t have the liquidity to pay timely, then the extra federal revenue would be forfeited. That could be a lot of revenue that potentially would be lost.

    I admit, however, that it’s kinda hard to understand that the state needs to borrow money in order to leverage the federal stimulus funds, especially since the stimulus funds are also just borrowed obligations. It’s no wonder so many believe that government has lost its way.


  32. - Bill - Wednesday, Oct 28, 09 @ 1:01 pm:

    ==As long as it’s paid back timely (and it always has been)==
    So how, exactly are they going to pay this back? I don’t see the economy booming anytime soon. I would have to classify this situation as a little more serious than a cash flow problem.
    It looks to me like the governor is manufacturing another crisis so he can plead for his inadequate income tax increase scheme.
    When all your credit cards are maxed out just get another one and borrow enough to make the minimum payment on each.
    If you want to see a real cash flow problem wait until next year when there will be little, if any, stimulus money.


  33. - Scooby - Wednesday, Oct 28, 09 @ 1:14 pm:

    Two years ago the legislature passed a budget that was $2 billion out of balance and told the Gov (the guy awaiting trial) it was on him to fix it. This past year they voted against tax increases, voted against spending cuts and then just gave the Gov (the new one) a lump sum appropriation that was WAY below the amount needed and told him to fix it.

    Now we find ourselves with popular programs unfunded (MAP grants, veterans scholarships), a huge backlog of unpaid bills and borrowing out of necessity.

    I didn’t get out of bed this morning to defend Pat Quinn, but for all the commenters here blaming him for the three issues above my advice to you is to either put the blame where it belongs or go back to fantasy land. Not Kiddieland though, that’s closed.


  34. - Okay Then... - Wednesday, Oct 28, 09 @ 1:45 pm:

    Scooby, unfortunately the buck stops with Quinn here. We can go back to G-Rod ’til the cows come home, but whether you like it or not at some point Quinn is responsible for what gets done in the name of his administration. The huge backlog of bills is nothing new and Quinn was aware of them when he assumed the governor’s office.


  35. - wordslinger - Wednesday, Oct 28, 09 @ 1:55 pm:

    What Schnorf said. It’s short-term, cash-flow borrowing and the market loves it because they get paid back first: always have, always will.

    But when you pay it back, you’re back in the same cycle of stiffing vendors for months on end.


  36. - Scooby - Wednesday, Oct 28, 09 @ 2:29 pm:

    “Okay Then”, you’re completely missing the point. See Assembly, General.


  37. - Fan of the Game - Wednesday, Oct 28, 09 @ 2:31 pm:

    The Veteran’s Grant has been unfunded or underfunded for the last 3-4 years. It is just this year the state made announcement of the cuts at the beginning of the fiscal year and not the end.

    But colleges and universities must still provide the services and bear the brunt of the costs.


  38. - Okay Then... - Wednesday, Oct 28, 09 @ 2:38 pm:

    Scooby, I am aware of the General Assembly’s role in this. The Senate voted for the tax increase, but the House did not. At the end of the day it is still Quinn’s budget mess.

    When the tax increase gets passed by the DEMOCRATS, it still won’t be enough or do enough to fix things, Scooby. Just wait. You’ll see. See Tax ‘n’ Spend.


  39. - steve schnorf - Wednesday, Oct 28, 09 @ 2:54 pm:

    Bill, you pay it back by moving the impact until later in the year. With the borrowing, in November we will pay some of our bills. In June, we won’t pay quite a few of our bills and will pay back the borrowing.

    It only changes our net/net position by the cost of the interest, which is negligible for tax-free short term borrowing. Ergo, it does nothing about the underlying problem, but does (partially) address the cash flow problem.


  40. - Bill - Wednesday, Oct 28, 09 @ 3:10 pm:

    Steve, OK, I think I get it but Quinn is not borrowing entirely to pay bills, he is borrowing to do new spending, i.e. the MAP grants, and who knows what else, that was not in the original budget passed and signed by him. That has to change the bottom line. He’s counting on a giant revenue enhancement in February. What happens if he doesn’t get it?


  41. - Leave a Light on George - Wednesday, Oct 28, 09 @ 3:58 pm:

    “@ Leave a Light on George
    There’s more than corn in Indidana (too)…
    Governor Mitch Daniels over der in Indiana is reportedly sitting on a $1 billion surplus. In addition to having previous political/government experience, Mitch Daniels was also a CEO in the private sector. He understands politics and he understands bottom lines. Indiana is lucky too.
    just sayin’”

    Not diss’in Indiana WCW. Just pointing out that the first reaction of the Missouri gov was to cut spending not raise taxes.

    “Instead of being so heavy-handed about his proposed tax increase and insistent upon making it his first line of defense, he should have gone above and beyond on cutting his administration costs. I think had he done that and other things, people would have been far more receptive to his tax hike and he would have had it by now.”

    I believe you are 100% correct in the above statement and I believe(hope) Quinn will still have to cut before he comes to us for a tax increase.


  42. - Bobs yer - Wednesday, Oct 28, 09 @ 8:40 pm:

    Quinn’s always ready for the hard decisions. Cut anything? No, raise taxes, borrow money, whatever. He’s the continuing enabler of the Blago/Jones reckless spending ititiatives.


  43. - Gravedigger - Friday, Nov 6, 09 @ 11:58 am:

    the more I read this the more irrate I become, many people are confused as to the new GI Bill, the Montgomery GI Bill, and the IVG. Let me tell you the new GI Bill I WIL NOT USE. You have to go for more than half time to collect any funds at all… Some or should I say most of us have jobs and go to school at night, there are times where I have only been able to take a 3 credit hr class. This is a horrible thing that is happening and I for one do not have the answer but the veterans that are benefiting from this are the same veterans that will one day be leading this state. maybe we should all move out of state and watch IL fall in on itself… Just my opinion.


Sorry, comments for this post are now closed.


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