$551 million. Poof!

Thursday, September 02, 2010

The new finding that Illinois politicians squandered $551.3 million due to their own bumbling confounded us: What would 551,300,000 dollar bills look like? Well, if we have our math straight, they would stack 37.4 miles high, give or take more raises for Gov. Pat Quinn's staff. And that stack would weigh 607.5 tons. By contrast, the 177-member legislature tips the scale at only about 20 tons — if you don't count the crushing weight of the Blagojevich scandal on all his Statehouse enablers.

Big money. Imagine the dent it would make in the $6 billion that insolvent Illinois owes to, among others, social service providers who care for our most helpless citizens. Imagine how many classroom teachers that lavish amount would fund. Imagine how many state troopers.

You needn't, though, do any imagining at all to see how our incumbent pols have wasted the $551.3 million. The saga is laid out nicely in a new report from the Civic Federation of Chicago. The plot seems tragic only if it's news to you that timid Illinois lawmakers prefer to burn your money than to make spending reforms that would annoy public employees and other clout-rich constituencies.

Maddening story short: Year after year, Illinois pols have been so financially undisciplined that the state is a serious credit risk to the bond buyers who lend it money. The three major rating agencies (Moody's, Fitch, Standard & Poor's) put Illinois' creditworthiness, along with that of necrotic California, as the very worst among the 50 states. As a result, Illinois has to give additional interest (your tax dollars) to bond buyers who, in turn, cross their fingers and accept the additional risk of loaning money to a deadbeat.

From September 2009 to July 2010, Illinois issued $9.6 billion in bonds. Whoopee, more debt. The Civic Federation compared Illinois' high cost of all this new borrowing to that of governments whose stewardship of public money has earned them higher bond ratings. On just this one year's borrowing, Illinois has to pay $551.3 million more in interest over the life of the bonds than if this state merited a decent credit rating. That works out to 20.9 percent more interest than taxpayers in a well-run Illinois would have to pay.

(Footnote to bond geeks — readers who have a life may jump to next paragraph: The Civic Federation calculates that Illinois actually "was charged approximately $701.8 million more for its bonds than it would have been charged if the state had maintained its credit rating as it stood in December 2008." But a federal subsidy under the Build America Bonds program reduces that gross total — the amount our slipshod leaders have flat-out wasted — to $551.3 million.)

This is where legislative leaders — House Speaker Michael Madigan, Senate President John Cullerton, always nice to see you — and their Springfield apologists try to blame the Great Recession for their problems. Except the recession hit states nationwide; all but one of those states has maintained markedly higher bond ratings. No, Illinois' problem is right here in Illinois: Our incumbent legislators and our governor spend too much, and borrow too much.

Yes, the report notes that Illinois' overall cost to issue debt has been lower because, during the recession, interest rates have dropped. But that's no excuse for wasting the $551.3 million. Illinois taxpayers are condemned to pay this unique penalty because our officials simply can't manage as well as officials of 48 other recession-ravaged states.

Wait, it gets worse: Quinn and many Democrats in the legislature have plans to borrow still more billions — and pass an income tax increase. But not until after the Nov. 2 election.

Gee, why would they wait until then? And how do you feel about that timing?

Does this little calendar offer you any recourse?