* Governor snubs legislators, expands health care plan

The $16 million expansion of the state’s All Kids program will cover people between 19 and 21 years old, and represents the first wave of health care expansion promised by the governor this month.

But critics warned the governor is making a serious mistake by snubbing legislative input and leaving taxpayers on the hook for what could be “an open-ended entitlement program.”

Blagojevich announced the expansion in Chicago, and a spokeswoman said it would be paid for by dipping into unspecified funds within the state budget.

* Governor could stretch health care plan

Surrounded by health-care advocates in the play room of a children’s hospital, Gov. Rod Blagojevich said Thursday that he would act without the legislature to expand state health insurance coverage for seriously ill young adults

The proposal, dubbed the All Kids Bridge, would extend coverage for 19-year-olds who would have been dropped from the state’s All Kids program.

“I’m going to continue to use all of the executive authority that the constitution gives me as the governor to expand health care for people,” Blagojevich said, speaking at a news conference in La Rabida Children’s Hospital on Chicago’s South Side. “And if the legislature won’t do it, then I’m going to do it.”

* Governor starts expanding health care for young adults

Money for All Kids Bridge will come from cutting waste and “pork” projects from the budget, Blagojevich said Thursday, although his aides previously have said new health spending would come from shifting money and controlling costs in existing programs.

Blagojevich said his new spending does not require approval from the General Assembly because he is changing eligibility rules for existing programs rather than creating new ones But his rule changes probably will have to go to a legislative committee, giving lawmakers a chance to block his actions.

Illinois Sen. Kwame Raoul, a Chicago Democrat, praised the governor’s actions at Thursday’s news conference.

* Governor moves on health care without approval

That’s part of why critics complain that Blagojevich’s expanded health programs are likely to run out of cash before the end of the current budget year. Blagojevich, though, refuses to wait for the General Assembly to approve the new spending.

“What am I supposed to do? Just give up on health care because they can’t say no to a lobbyist?” Blagojevich said. “We’re not supposed to call ‘em out when they make priorities that are just crassly political. And they’re sellin’ out the interests of their constituents because some lobbyist tells ‘em they can’t support a way to pay for health care. I believe you’re supposed to fight for it.”

* With state late, hospitals wait

Spokeswomen for Hynes and Madigan said the governor’s long review period made it much harder to borrow the $1.2 billion in time. DeJong said the governor took so long to sign the bill because he wanted to give it a “careful review.”

“While we had a tight time frame to pull this together, we were able to secure everyone’s sign-off needed, including the comptroller, treasurer and ratings agencies, except the attorney general, who missed last week’s deadline,” DeJong said.

Sen. Jeff Schoenberg (D-Evanston), who spent last week trying to cobble together enough political support for the deal, said the program fell victim to “the lack of communication and mistrust that exists at the state Capitol.”

He said it will take another vote of the legislature to make the 2007 payments unless “a miracle happens” and the state is able to borrow the $1.2 billion within 10 days.

*** UPDATE *** From the Bond Buyer earlier this week. They beat the Tribune to that story above…

Illinois finance officials and the state Attorney General’s office accused each other of scuttling the state’s proposed $1 billion general obligation note sale that was expected to generate as much as $80 million in additional Medicaid matching funds and pay off a backlog of Medicaid bills.

The GO certificates were to sell competitively this past Monday and be repaid within 60 days, possibly with revenues generated through the state’s hospital assessment tax that is used to leverage about $600 million more in federal matching Medicaid dollars annually.

The state’s treasurer and comptroller must approve short-term financings, and the attorney general typically signs off on all bond transactions. The state faced a deadline of this coming Friday, 60 days past the close of fiscal 2007, to close on the deal in order to count the proceeds under a fiscal 2007 supplemental appropriation that would allow the state to distribute the proceeds to hospitals under the assessment program. For accounting purposes, state law permits a 60-day lapse period for paying bills for 2007 and collecting revenues to count toward the prior year.

“While we had a tight timeframe to pull this together, we were able to secure everyone’s sign-off needed, including the comptroller, treasurer, and rating agencies, with the exception of the attorney general, who missed last week’s deadline,” budget office spokesman Justin DeJong said this week. “We’re disappointed because an opportunity has been missed to help both the state and hospitals providing care to our Medicaid clients, but we’re committed to finding a way to make this work despite this set-back.”

The deal was pulled together quickly in recent weeks, but lawyers working on the transaction warned last week that Gov. Rod Blagojevich needed to sign the $59 billion, fiscal 2008 budget before the state could proceed. The governor acted on the budget last Thursday, but the attorney general’s office raised other questions over the transaction and did not sign off by late last week when the state had hoped to post a notice of sale, according to budget officials.

Attorney General Lisa Madigan’s office sharply denied any responsibility in the sale’s delay, stressing that its approval is needed solely on the final documentation and not for the state to proceed with the transaction. Madigan chief of staff Ann Spillane blamed the deal’s troubled timing on the governor’s failure to sign the supplemental appropriation in a timely fashion after its passage this spring. “The governor’s office botched the hospital assessment program by not signing the bill until Aug. 13 and is now looking for someone to blame,” she said, adding that staff lawyers had conceptually agreed to the borrowing although they were still reviewing various details.