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* The AP’s series on the state’s overdue bills continues today…
The Illinois Department of Corrections insists its failure to pay its bills on time isn’t creating any safety concerns inside state prisons. But documents show a department executive warned of “a big problem looming” if a food supplier halted deliveries.
“I am fearful at some locations we won’t be able to meet the food needs of the population. To an inmate, food is the most important part of the day, so this obviously would create huge security concerns,” Bryan Gleckler, the department’s chief financial officer, wrote in a June letter that was obtained through the Freedom of Information Act.
The state soon coughed up part of the $2.5 million it owed the supplier, MJ Kellner Co. of Springfield, and Gleckler now plays down the safety concerns. He said the department tries to keep enough food on hand to keep providing meals even if deliveries are cut off.
As of Sept. 8th, the Illinois comptroller’s office had $39.3 million in Corrections-related bills that it hadn’t yet paid. That’s bad enough, but check out this item on the list…
Interest on overdue bills: $2.3 million (5.8 percent [of total])
We’re even late on paying the interest on overdue bills?
Sheesh.
* Quad Cities Online has a handy tool for taking a look at Illinois’ list of overdue bills. The state has 166,002 overdue bills for about $4.9 billion, according to the site. I broke that down by amount owed out of curiosity.
There are, for instance, about 169,000 overdue bills on the books for less than a million dollars. Total all of them up, and you get $1.8 billion.
By contrast, there are 620 records of overdue bills exceeding a million dollars, for a total of about $3.1 billion. Using the SJ-R’s past due bills site, I discovered that almost a third of that $3.1 billion, about $1.4 billion, is owed to state agencies via interfund cash transfers. Here’s a list of the other top bills by vendor…
REGIONAL TRANS AUTHORITY… $306,335,651.20
UNIVERSITY OF ILLINOIS… $298,713,296.07
CHICAGO DIST 299… $245,231,291.81
TEACHERS RETIREMENT SYSTEM SPRINGFIELD… $180,810,081.30
STATE UNIVERSITIES RETIREMENT… $109,707,083.00
STATE EMPLOYEE RETIREMENT SYST… $74,970,220.00
SIU CARBONDALE - PAYROLL CLEAR… $55,605,902.76
CHICAGO CITY TREASURER … $50,027,005.73
HELP AT HOME INC… $48,101,966.81
Help at Home, Inc. isn’t the only business on the bigtime past due bills list. Addus Healthcare is owed $34 million, for instance, and Harmony Health Plan of IL is owed more than $27 million.
* My point here is that perhaps the state could fashion a borrowing plan to pay off either the smaller bills, which are owed to a lot of not-for-profit service agencies and for-profit companies, or it could design a plan to provide immediate relief to all non-governmental entities. Yes, this would be unfair to the RTA, the U of I, etc., but these overdue bills are a significant drag on the Illinois economy.
Borrowing is not popular, to say the least, but a relatively small borrowing plan to pay off some of the state’s overdue bills coupled with some negotiated budget cuts could do wonders for thousands of Illinois businesses and help boost the economy.
Thoughts?
posted by Rich Miller
Thursday, Oct 20, 11 @ 9:47 am
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Re-financing the state debt? What a novel idea!
Comment by Bill Thursday, Oct 20, 11 @ 9:57 am
== perhaps the state could fashion a borrowing plan to pay off either the smaller bills, which are owed to a lot of not-for-profit service agencies and for-profit companies==
Love this idea. And if, as you say, it would be limited and it could be sold as “to pay small businesses and community non-profits money the state owes them”, I bet it’d be more popular.
Comment by Robert Thursday, Oct 20, 11 @ 10:00 am
Refinancing the state debt at a lower rate of interest, saving taxpayers money and paying vendors for goods and services already provided.
What are you Miller, some kind of socialist or something? Or is that class warfare? I can’t keep track of the the latest talking points.
Comment by wordslinger Thursday, Oct 20, 11 @ 10:08 am
You have my vote against Quinn or any of the House Dems, Senate Repubs or House repubs that keep blocking short term borrowing.
Not paying the bills is what is hurting the State economy.
Comment by Spliff Thursday, Oct 20, 11 @ 10:08 am
What world are all of you living in?? Pat Quinn’s massive income tax this January fixed everything!! C’mon Rich, quit playing April Fools in October!!!
Comment by just sayin' Thursday, Oct 20, 11 @ 10:11 am
The Trustees of the retirement systems that are not getting paid timely should sue the state for payment. The amount of interest paid is likely far less than the lost investment returns compunded over time.
The failure to enforce collection is a breach of fiduciary duty.
Comment by Quinn T. Sential Thursday, Oct 20, 11 @ 10:12 am
when i was administrator of a small agency, i timely filed a dozen or so vouchers to pay another state agency (UIS) for personnel expenditures they paid, as specified in our contract. the comptroller held the vouchers forever, then told me i had to pay late payment interest. no way i was going to do that. i told our fiscal officer not to pay the interest penalty, i would gladly take an audit finding if it came to that. late payment interest penalties between state agencies is ridiculous.
Comment by langhorne Thursday, Oct 20, 11 @ 10:17 am
Aren’t interest rates at or close to an all time low? There isn’t a better time to refinance debt. Rates are so low now, it is almost like getting the use of the money for free.
Wait, that’s too easy. Haven’t we learned from the Tea Partiers that Borrowing is Borrowing, and you should never borrow, no matter how economical it is.
Comment by Working hard in Southern IL Thursday, Oct 20, 11 @ 10:18 am
“just sayin’” if you had been paying attention when that tax hike was passed, it was clearly predicated on borrowing to pay overdue bills. A portion of the tax hike, in fact, is officially set aside for this task.
Comment by Rich Miller Thursday, Oct 20, 11 @ 10:20 am
Borrowing at a lower interest rate does make sense, but the real problem is that even if the current bills are paid by borrowing, the administration will start the same process of letting the bills start to pile up again. So then the state has to pay for the borrowing and will again have overdue bills. The administration will spend whatever money they have and more. Then they will want to borrow again to pay off those overdue bills.
Comment by Lawman Thursday, Oct 20, 11 @ 10:29 am
Hopefully, there is a member of the GA who is reading this post and has enough intestinal fortitude to bring this up in the veto session.
Such a novel idea Rich! Paying bills, reducing interest, getting many small businesses the operating capital they desparately need. You must be a financial genius to come up with this!!
I simply canot understand the thought processes or lack thereof in the GA. Quinn suggests borrowing to pay the bills, The opponents say he included money to pay some operating costs so they kill the whole thing. NO ONE counters with a bill that cuts the operating costs. They don’t even show a plan or an explanation of where those extra costs are.ie; “Gov Quinn is asking for x dollars, the bills to be paid are y dollars, showing a difference of z dollars. Gov Quinn what are the z dollars for?” Or maybe that would take up too much of their time or require a real working knowledge of the budget. Evidently it is easier to just say no and not put forth the effort to find a solution.
Comment by Irish Thursday, Oct 20, 11 @ 10:32 am
How about if the non-public agency employers keep what would otherwise be withheld for state income tax for their payroll, and use that money to pay their own bills and their vendors, and then deduct that amount from what the state owes them, and bill the state for the balance.
Comment by Quinn T. Sential Thursday, Oct 20, 11 @ 10:33 am
John Sullivan had a bill last year to pay off Medicaid liabilities - which mostly tied to not-for-profit providers..of course that’s growing now that hospitals and nursing homes are now facing delays.
My point is it was proposed last year in conjunction with the Springfield Chamber of Commerce.
It did not have bi-partisan support then..but it might now…but then I see statements from Dan Kotowski about not supporting borrowing….
Comment by Leroy Thursday, Oct 20, 11 @ 10:37 am
Look back in the CapFax archives. I love the way people always say to refinance the debt. Okay, I’ll even go along with the concept. IF we offset the borrowing with spending cuts. Nobody ever talks about that. This is not a one sided coin in my opinion. Both issues need to be simultaneously addressed. There is no credibility in this GA and Governor. Tax increase to help with pension funding - ha!. A balanced budget that spends MORE than the previous out-of-wack budget.
If you want borrowing, at least pretend to offer a compromise to taxpayers sick and tired of Springfield. Support borrowing AND offsetting spending cuts. Maybe then we can have a decent dialog. Everything else is posturing.
Comment by Cincinnatus Thursday, Oct 20, 11 @ 10:39 am
It’s a no-bainer. Which, I guess, explains a lot of what we’re witnessing.
Comment by MikeMacD Thursday, Oct 20, 11 @ 10:40 am
Rich: It is pretty obvious to many posters here that he wrong people are sitting in the chairs under the Dome in Springfield and/or the there remains a steep financial learning curve for people in Leadership positions that could move a rational borrowing plan forward in the Legislature … in any case, please file this under “DUH”…
Comment by Loop Lady Thursday, Oct 20, 11 @ 10:43 am
“just sayin’” don’t get yourself banned. One more deletion and you’re going into the automatic moderation que.
Comment by Rich Miller Thursday, Oct 20, 11 @ 10:44 am
Rich,
A borrowing plan makes sense especially at today’s interest rates which are less than what we are paying for overdue payment interest. But it should be short term with a dedicated untouchable repayment stream, and a plan to reduce expenses to eliminate any possibility of overdue bills creeping into this year’s budget.
Comment by downstate hack Thursday, Oct 20, 11 @ 11:00 am
I agree with Cincinnatus here, if I had confidence that re-structuring the debt would also include reasonable cuts and fiscal accountability I would be more supportive. That PQ pays lip service to cuts is not enough when he turns around and seeks to hike spending. Has a budget been passed so we can know/see what is earmarked for spending?
One issue should be chained to the other. If more borrowing is allowed the liklihood that it opens the door to more spending of what we don’t have is too great.
Comment by dupage dan Thursday, Oct 20, 11 @ 11:09 am
Isn’t lowering interest expenses a spending cut??? Why does this spending cut need to wait for the Dems and Repubs to agree on other spending cuts first? Can’t interest payment cuts be the start. If we don’t start somewhere, it will never start. Why do we need a pie in the sky “all cuts now, or no cuts at all”?
Comment by Working hard in Southern IL Thursday, Oct 20, 11 @ 11:21 am
Wasn’t a portion of the tax increase set aside to pay off a borrowing plan? Also, we now have clearly stated spending caps, so we actually know how much we are supposed to spend for the next 4 years. I believe the debt service is already included in those caps.
I know it’s not ideal, but wouldn’t paying the debt be the best case scenario? More money in the economy means more income (5% income tax) and more spending (5% state sales tax) plus other multipliers. I know its a bit simplistic, but I think you all get the gist. And, it’s better than doing nothing.
Comment by late to the party Thursday, Oct 20, 11 @ 11:38 am
The GOP–and now Dems like Kotowski–have decided the route to fiscal rectitude is oppose measures to reduce the state’s interest rate burden and pay its bills.
The GOP position, due to its slavish devotion to Tea Party spittle is unsurprising, but Kotowski is a greater, shameful embarrassment, all the while he’s prattling on about “Budgeting for Results.”
Leading for Results would be appreciated.
Comment by King Louis XVI Thursday, Oct 20, 11 @ 11:42 am
Yes, a sensible proposal, which the financially aware members of the GA, and gov’s office, have been pushing for over a year. It was resisted by people primarily concerned with political messaging.
It makes financial sense even as a stand alone transaction; but it was actually part of a plan in the House that included spending caps which means that it could not be directly used for higher spending, and was directed at Accounts Payable, to gain the interest differential.
When the House Repub caucus voted as a bloc to kill this bill, we all lost the opportunity to cut these costs.
Comment by Anonymous Thursday, Oct 20, 11 @ 11:44 am
Anon 11:44 above was me. My laptop occasionally loses my moniker, for some reason.
Comment by walkinfool Thursday, Oct 20, 11 @ 11:46 am
–If you want borrowing, at least pretend to offer a compromise to taxpayers sick and tired of Springfield. Support borrowing AND offsetting spending cuts.–
You’re just content to be a deadbeat. You’re already borrowing, from vendors, at a much higher rate of interest. What don’t you understand about that?
Comment by wordslinger Thursday, Oct 20, 11 @ 11:48 am
Cinci and DD:
Are you purposely being dense and ignoring the billions in cuts that have already been made? Are you not aware of the agencies that currently don’t have enough money appropriated to them to pay their current obligations? This isn’t about spending more money. It is about common sense. Apparently you are OK with continuing to borrow from providers. That is the effect of your stance and that of others who oppose borrowing.
Comment by Demoralized Thursday, Oct 20, 11 @ 12:01 pm
I proposed a much larger debt consolidation proposal than Gov Q when I was governor. My proposal called for the issuance of GO debt to eliminate the state’s backlog of medicaid bills..the idea of repaying these debts back over five years seems an improvement on what I proposed.
Comment by Jim Edgar (tongue in cheek) Thursday, Oct 20, 11 @ 12:09 pm
1/4% of the recent income tax increase was a permanent increase “dedicated” to paying off the bonds that were supposed to be issued for the FY backlog of around $8B. The money is already there to pay off the bonds.
In fact , that brings up an interesting question. Since that 1/4% was supposedly dedicated to only paying off the bonds, were is the money that’s already been collected? Is it sitting in a special account waiting for the borrowing bill? Is it being used to pay part of the backlog? Or did somebody figure out how to “borrow” that money and use it for something else?
Enough already; pass a bill to borrow the money and pay off the backlog.
Comment by Retired Non-Union Guy Thursday, Oct 20, 11 @ 12:27 pm
Well actually there was a plan formulated, it’s listed below:
Senate Bill 342 - $1.482 billion for “non-governmental vendors” which includes business vendors and private service providers.
Senate Bill 343 - $1.134 billion for state medical bills (HIRF).
Senate Bill 344 - $800 million for corporate tax refunds.
Senate Bill 345 - $2.76 billion for governmental entities.
SB 342 was called for a vote and it only received 19 yeas. Some of the Democrats didn’t want to have to rein in spending to pay off old bills while the entire Republican caucus was opposed to “new borrowing.” There’s a plan that has been vetted and the legislation is still out there.
Comment by Ahoy Thursday, Oct 20, 11 @ 12:54 pm
Oh, the bills above were all 7 year repayment plans using 3.5% interest.
Comment by Ahoy Thursday, Oct 20, 11 @ 12:55 pm
I understand the thinking of the opponents of borrowing. It is the lack of trust that our leaders will do the right thing with the relief created by paying off old bills. Will we just go back to our old ways of using that relief to increase spending? Look at the discussion of the past 2 or 3 weeks. Revenues are performing, so why don’t we use some of that money to fund programs that were cut? PQ vetoed $300M, why don’t we use that money to fund programs, avoid additional cuts?
C is right on this one. The ‘12 budget under appropriates against liabilities by 2 billion. That’s where the focus should be. Solve that, and then borrow for old bills.
Comment by steve schnorf Thursday, Oct 20, 11 @ 1:09 pm
Democrats are still in hot water over this and will continue to be unless Republicans find something significant to draw their support. As a minority party they should find themselves in a very good position to extract things that can ensure we change for good the policies that have brought us to this point.
Comment by Truth Seeker Thursday, Oct 20, 11 @ 1:12 pm
No to more borrowing. Yes to more cuts. Yes to removeing all hospitals and non profits tax emept status.
Comment by Palatine Thursday, Oct 20, 11 @ 1:33 pm
Senate Republicans have made themselves very clear on how they feel about borrowing.
Comment by Dirty Red Thursday, Oct 20, 11 @ 1:33 pm
Following up Cincy & Schnorf:
http://www.wandtv.com/story/15741441/poll-quinn-approval-rating-at-355
Comment by Dirty Red Thursday, Oct 20, 11 @ 1:58 pm
A two-tiered borrowing/bonding system might be in order. Rich, I like the idea. I’m not a big fan of borrowing money to pay past-due bills. However, it’s apparent that small providers - especially poor(er) school districts and one or two medical/pharmaceutical providers - are suffering an inordinate amount of pain. If we could perhaps come to an agreement to borrow some money and pay them, that would be a start.
But I understand the concern. My worry is that an all-at-once borrowing scheme will result in the same thing happening again and again. It’s obvious that it took us a while to get to this point, but there’s nothing preventing us from again reaching a point when we’re nearly at one year’s time before we repay our vendors. And the interest rate won’t always be so low.
Comment by Team Sleep Thursday, Oct 20, 11 @ 2:14 pm
This makes me wonder - with all of the funds owed from one agency to another, how much of the debt is constructively double counted? If DHS is waiting for an appropriated $100 million to come in, and vouchers have been created to pay DHS that money, and DHS owes it’s vendors $100 million, is that going to result in $200 million in past due accounts, or is the amount of the debt properly accounting for this and eliminating past due amounts between agencies of the state? Of course, that would not impact amounts owed by the State to other (non-state) government units like RTA. But the amounts due to RTA may very well be paid out immediately by RTA to vendors that have past-due accounts with RTA if the money were to be paid to RTA in a lump sum.
Which is also something to keep in mind. Plenty of businesses and non-profits are waiting for the state to pay local government units, so those local govs can pay their own bills.
By the way, those vendors of the state that are cash-rich undoubtedly love the current situation. How many low-(or essentially no-)risk investments are out there these days that pay an interest rate of 8%?
I don’t know of any savings accounts, CD’s, money markets, or US Treasury debt that pays a rate that high. However, if the State of Illinois owes you money, you’re getting an 8% return on that investment. Of course, if you’re cash poor, you’d probably prefer to have the money than to have an illiquid investment, even one that pays 8%.
But if you’re a rich hospital, why not let the state sit on as much as possible? You’re not gonna get a reliable 8% too many other ways. Heck, even if you’re not a rich hospital, but if you’ve got a line of credit with a bank and an interest rate on that line of 5%, then getting 8% juice on your involuntary loan to the state is a pretty good deal. Arbitrage, baby!
Comment by jerry 101 Thursday, Oct 20, 11 @ 3:20 pm
jerry, the double counting is a good point and something that I was pondering earlier today. Haven’t followed up yet, but I will.
Comment by Rich Miller Thursday, Oct 20, 11 @ 3:26 pm
The stupidest part of the whole debate are people who keep saying “no to more borrowing”.
People, the borrowing has been done. The state has borrowed from hospitals, non-profits, for-profit companies of all sorts, even from itself. And it pays 8% on those borrowings. That is real, true, actual, hardcore debt. There is a debt issuance that was never directly authorized by the legislature or anyone else in an amount of up to $4.9 billion dollars, with a usurous rate of 8% attached to it. It’s as real as any general obligation or revenue or whatever bond issue could be. It just doesn’t have a nice, pretty official statement associated with it.
If the state would just refinance that debt (and that’s what a bond issuance would be - refinancing an existing debt, not issuing a new debt), then that could cut the interest rate by several points, save taxpayers MILLIONS of dollars, and inject $4.9 billion into the coffers of any number of struggling, cash poor businesses and other employers.
The debt is already there. To think otherwise is to stick your head into the sand.
Comment by jerry 101 Thursday, Oct 20, 11 @ 3:27 pm
Jerry - Unfortunately, there are people who would rather stick there head in the sand and stick to some ideal that borrowing is wrong. They don’t seem interested in all in the cost savings. It’s one of those, don’t do anything, let things get worse, then blame it on the current administration, to prove a point so you can get elected. That’s happening at the State and Federal level. If the two parties would actually work together for the common good, things will improve. But as it is, political posturing is more important.
Comment by Working hard in Southern IL Thursday, Oct 20, 11 @ 3:46 pm
The argument against allowing more borrowing is that with the bills paid off there will not be as much focus on spending restraint. We will have spread todays debt over a decade or more but the Gov and legislators will see freed up cash and spend it.
IF you look at the Blago era, that is what happened. They let him skip the pension payment and he created a bunch of election year givaways that are hard to pull back now.
By not borrowing, they keep the pressure up for cuts. At least that is the theory.
Comment by Raising Kane Thursday, Oct 20, 11 @ 3:49 pm
- Demoralized - Thursday, Oct 20, 11 @ 12:01 pm:
Cinci and DD:
Are you purposely being dense and ignoring the billions in cuts that have already been made?
===========
As I said above, you haven’t cut spending if you have increased the year-to-year spending and liabilities. All you’ve done is slow the rate of increase, at best. Re-read Steve Schnorf’s post, above…
Comment by Cincinnatus Thursday, Oct 20, 11 @ 4:01 pm
Langhorne (and others who’ve noted this, like jerry 101) is right: late payment interest penalties between state agencies IS ridiculous and a complete waste of scarce resources. The Prompt Payment Act should be amended to stop this.
Any legislators on here? If you’re looking for a bill that cuts waste, this is a great candidate. I don’t know how much money we’re collectively talking about (perhaps, Rich, you’re tallying this for your previously-mentioned follow up?), but what a great bill to demonstrate to your constituents that you’ve got a concrete, easy-to-understand proposal to cut the proverbial “government waste.”
Comment by TwoFeetThick Thursday, Oct 20, 11 @ 4:04 pm
I will honestly say I haven’t read all the comments, but it used to be the state didn’t pay interest on any bills under $500 that are overdue. Now they pay on all bills that are overdue. Can you imagine what it’s like to get an interest payment for a payment you received 9-10 months after you did something, that totaled $40. Over 6 months AFTER that, I got a check for the interest on that payment. This is ridiculous and needless spending on the part of Illinois.
They need to change this rule and go back to only paying interest on payments of significant sums, and make those payments at the time the payment is made, if they MUST pay anything at all.
It’s no wonder the state is broke. And yeah, find a way to blame lazy state employees on this one.
Comment by Wickedred Thursday, Oct 20, 11 @ 5:57 pm
Cinci:
If you think you can sufficiently cut the budget in the near term to take care of the outstanding bills then you are living in a fantasy world. I don’t have to re-read Schnorf’s post. I read it once. I don’t agree with his suggestion.
Comment by Demoralized Thursday, Oct 20, 11 @ 5:57 pm
By the way, you have to also calculate in the waste of state resources in the staff used to calculate the payments needed, the staff who have to generate both checks and then to send the checks out. Some payments are for less than $1.00.
Comment by Wickedred Thursday, Oct 20, 11 @ 5:59 pm
Demoralized, I not only agreed with your position before the tax increase, I advocated it vigorously. We couldn’t cut enough to get out of our crisis, therefore we had to have a tax increase plus cuts.
Now we have the tax increase. The failure to take the steps necessary to balance the budget after the tax increase isn’t acceptable. Yes we’ve had cuts. So far they aren’t near enough.
Your argument doesn’t wash with me any longer.
Comment by steve schnorf Thursday, Oct 20, 11 @ 6:43 pm
How about just borrowing the 1.4B to pay the outstanding interfund cash transfers? If they are outstanding, that probably means the funds are already apropp’d, but there is no cash on hand to push the payment thru. It’s like a completely artificial INTERNAL credit crunch.
Comment by Happy Returns Thursday, Oct 20, 11 @ 7:44 pm
Traditional conservative solutions are too weak now. Of course they make sense, but not after a decade of mass budget stupidity capped off with mass corruption, waste, fraud and then a global eccnomic meltdown.
The idiots who got us into this mess are still in office. They got rewarded with reelections when voters saw that our pie stopped growing and wanted a sugar daddy to protect their piece.
So, we are more screwed than other states, except perhaps California. Even New Jerssey threw out the bum who kept playing reigndeer games with taxes and spending. We reelected them. We rewarded them. They don’t know what to do.
This means that simple fixes will not do it this time. There isn’t any slack left to tax, or to just cut away. And, the guys in office won’t cut anyway because they don’t know how to cut. Everything to them is a revenue problem instead of seeing both sides of the ledger. There is no leadership in Illinois capable of doing what needs to be done.
I believe that if we did not have a debt, the bozos in office will just keep doing what they have done ruining Illinois to recreate it. These people are simply hopeless and will not relearn or fix the mistakes they made.
As a conservative, I have reached an absolute end with the retarded morons running Illinois. You could take these people and fly them to Austin and they would wreck Texas in a decade. Their thoughts on government is so embedded they cannot be taught how to balance our budget.
Illinois reached a tipping point sometime in the recent past. We just seemed to have forgotten how to be productive and expend the economic pie to keep the state going. Now we got to bargain with zombie business has beens like Sears because we are so desperate for new business growth, we have no choices left. And the attitude from people who think we don’t have to bribe these dead companies because they don’t like businesses or something wacked they learned back in some pukey liberal arts college years ago, sheesh!
Back in 2005, we jumped the shark. What could fix most states with some conservative fiscal measures won’t fix us anymore. If the idiots running Illinois don’t like cuts, they are going to look like a bunch of dazed OWS or Grecian pensioners when everything truly crashes.
So I support this modest proposal. We are out of ideas now.
Comment by VanillaMan Thursday, Oct 20, 11 @ 8:39 pm
===Now we have the tax increase. The failure to take the steps necessary to balance the budget after the tax increase isn’t acceptable. Yes we’ve had cuts. So far they aren’t near enough.===
You’re right Steve. But you also know the impact of the deeper cuts needed to balance the budget will likely lead to more job losses in Illinois. A large factor in the 10% unemployment rate is public sector layoffs and cuts. Short-term borrowing to pay these bills might delay more public sector job losses a couple of years maybe, giving the national economy time to pick up some steam. Lowering the unemployment rate by 2-3 points will pump lots of revenue into the public purse.
We need to take advantage of historically low interest rates to pay the backlog of bills. We need to maintain the House spending cap this year, make the full pension payment, and cut a some more next year. But deep cuts now will only make a bad economic situation worse.
This recession is bordering on depression because of lack of consumer demand. Layoffs only depress demand. Borrowing pumps billions of dollars into the economy and limits more layoffs. It’s a two-fer and it’s long overdue.
Comment by 47th Ward Thursday, Oct 20, 11 @ 9:09 pm