Quick Hit Robert Dietz Monday February 7th, 2011, 2:17pm

State Borrowing Plan Faces Uncertain Future

With a tax hike signed into law, Gov. Pat Quinn and legislative leaders have turned their attention to a borrowing plan as the second part of their attempt to fix the state's budget mess. Senate President John Cullerton (D-Chicago) has introduced SB 3, which would authorize the borrowing of $8.75 billion and allow the state to make payments to vendors that are at least 60 days past due.

With roughly half of the estimated $13 billion to $15 billion budget gap consisting of late payments to schools, social service providers, and other state vendors, passage is sorely needed. A bond could help erase that backlog immediately, preventing further layoffs and service reductions.

But last November's election results are putting the chances of passage in serious jeopardy. Borrowing legislation requires a three-fifths majority in the state senate, but because of electoral losses, that is no longer a number Democrats can achieve alone -- meaning any borrowing plan will need some Republican support. That won't be easy. A spokeswoman for Senate Minority Leader Christine Radogno (R-Lemont) told the State Journal-Register, "I don’t foresee a great deal of Republican support for continuing to borrow while failing to address the structural problems with the deficit."

Passage, in other words, is going to need a major push from Quinn and other Democratic leaders, and there are signs that an intense lobbying effort is under way. David Ormsby highlighted ways in which the administration is noting the possibility of looming human services cuts while promoting the necessity of a borrowing plan, though, Ormsby explains, they are "entirely separate fiscal issues." In his column this week, Rich Miller criticized this tactic, writing that "Quinn wants [service providers] to work to get the money they’re owed while he’s simultaneously eviscerating their funding."

Then there's the uncertainty surrounding the $31 billion capital plan -- still stalled in the courts -- to make matters even more complicated. David Yepsen of the Paul Simon Public Policy Institute told Illinois Issues that an appellate court decision that found the capital plan to be unconstitutional will reverberate and cause "jitters at least for a few years."


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