Borrowing plan more of the same
The question many of our state elected officials are unfortunately wrestling with is this: How much money do we have to borrow to get out of debt?
It should be a nonstarter. But bad ideas in Springfield never go away.
High-profile legislative Democrats have resurrected a plan to borrow billions of dollars to pay down Illinois' roughly $9 billion backlog in unpaid bills.
State Sen. John Sullivan of Rushville is among those leading the charge. He says it's "not morally right" to have a backlog of unpaid bills. State Rep. Frank Mautino of Spring Valley contends that borrowing would result in "tremendous savings."
Republicans dispute that claim, contending that borrowing $9 billion to pay off a debt of $9 billion is a circular approach that doesn't solve the problem.
"You certainly don't borrow to pay off a debt," said state Comptroller Judy Baar Topinka.
If it wasn't clear earlier — and it should have been — it's beyond dispute now: Our elected officials have no idea how they're going to get the state's finances out of the deep hole they've dug. They're searching for easy answers to a horrible problem that has been years in the making. With no easy answers in sight, they find themselves facing the same problem as a drunk staggering down the street looking for a light pole to grasp.
Considered in that context, it's not surprising they consider borrowing as just another option in dealing with state debt.
The gist of the argument is this: the state can borrow money, particularly in the current near-zero-interest-rate climate, pay unpaid bills and save money in the process.
Why? The state pays an interest rate of 1 percent a month on unpaid bills. The interest rate clock starts to run 90 days after the comptroller's office determines a bill valid.
Proponents say savings would come with reduced interest payments, 12 percent a year compared with whatever low rate it would pay on the borrowed money.
That's a valid argument, from a theoretical standpoint. There's no disputing the interest-rate play.
But the savings would not be as great as some suggest because the state doesn't pay interest to governmental institutions, like the University of Illinois, to which it owes vast sums.
But what would legislators do if extra money is freed up by reduced interest costs?
If past is prologue, the obvious answer is that they would spend it — wiping out the anticipated savings. Borrowing proponents promise they would do no such thing — but their promises are not worthy of belief. Desperate people, particularly those confident their past words will not be held against them, will say anything.
This is, of course, not the first time that state officials have proposed bold action to address the problem of unpaid bills. Two years ago, Gov. Pat Quinn and legislators dramatically increased state income taxes to pay bills. While the tax hike generated roughly $6 billion in new revenue, the state's backlog of unpaid bills remains.
Much of that new revenue has simply gone to shore up the state's five underfunded public pension systems. That's another problem legislators can't bring themselves to face.
There's no minimizing the depth of this state's financial problems. It has already raised taxes dramatically. But it still can't pay its bills in a timely fashion. It still can't fund core state programs because its obligations to its public pensions are so large. As of a couple weeks ago, its elected officials still couldn't bear the idea of tackling these problems in a meaningful way.
Judging from the current proposal to borrow money to pay off debts, not much will change when legislators return to Springfield next week.