Herald & Review

State's failures cost taxpayers millions more

Tuesday, September 07, 2010

The state government's inability to adopt a reasonable budget, combined with borrowing billions of dollars, will cost taxpayers an extra $551 million.

That's the conclusion of a new study by the Civic Federation of Chicago, a nonpartisan research group.

The organization analyzed the state's bond rating and the $9.6 billion in borrowing by Illinois over the past year. The study looked at the interest paid by Illinois, compared with that of other states and local governments.

The state's bond rating, while still investment grade, has been lowered several times in the past year. That lower bond rating is costing taxpayers the $551 million, Laurence Msall, president of the Civic Federation, said.

"This is a catastrophe for Illinois," he said, emphasizing that the extra money could have been spent on other needs and services. Or, used to erase a part of the state's budget deficit.

The $9.6 billion in borrowing is the highest amount since $10 billion was borrowed in 2003, under ex-governor Rod Blagojevich.

Gov. Pat Quinn's office said the borrowing was necessary as the state deals with a $13 billion budget hole.

"These bonds, which were sold at attractive rates, are bringing immediate and long-term benefits to the state when it comes to putting tens of thousands of people to work and improving our roads, schools and bridges. These investments will pay dividends back to the state and its citizens for years to come," Kelly Kraft, Quinn's budget spokeswoman, told The Associated Press.

That argument would have some validity if the state didn't depend so heavily on borrowing to keep the doors open. But the state's budget for this year is based on leaving bills unpaid and borrowing more money.

That's a recipe for disaster, which will only make the state's budget problems worse in coming years.

According to the Civic Federation, most of the additional interest will be due during the early years of the bonds, when Illinois is still struggling to emerge from the current economic climate. The additional interest will amount to about $73 million in 2011.

The lower bond ratings are a direct result of the inability of Quinn and the General Assembly to address the budget mess. Many state governments are struggling with budget issues in this economy. But the problems in Illinois are among the worst. To date, the state has only added to the flow of red ink by borrowing more money instead of addressing the budget in a responsible manner.

It's also ridiculous to continue to borrow money without addressing the fact that state government spending is out of control.

The inaction by our state's leaders is inexcusable. It's another example of taxpayers being adversely affected because the General Assembly and the governor refuse to address the budget.