Brady won't rule out record $50 billion borrowing idea to help state budget

Wednesday, October 06, 2010

Republican governor candidate Bill Brady has been blasting Democratic Gov. Pat Quinn for taxing, spending and borrowing, but today Brady refused to rule out borrowing a record $50 billion to shore up state finances.

"All options have to be considered," Brady said.

Brady's willingness to consider massive borrowing for the state employee pension systems came in response to questions at a downtown news conference where the candidate sought in vain to focus on his endorsement by New Jersey Gov. Chris Christie, a darling of Republicans and conservatives.

Any mention of a pension borrowing option draws parallels to the first year of ousted and convicted Democratic Gov. Rod Blagojevich, who won approval of a $10 billion loan in 2003 but sliced off a portion of the money to help pay for regular state government operations. Brady said he would not allow any pension bond money to be used to plug normal budget shortfalls, preferring cuts instead.

Brady, a state senator from Bloomington, stressed the pension borrowing option only would be worth considering if interest rates on borrowing were low enough to help the state.

The idea has bounced around the legislature in recent years along with the fluctuation of the markets, particularly when rates sank. But lawmakers have been skittish about taking up the issue because markets have tanked and the Blagojevich pension borrowing drew controversy when prosecutors questioned whether fees on the bonds were part of a kickback scheme.

Brady spokeswoman Patty Schuh played down a pension bond as "only an option" because the retirement funds are so underfunded that everything is on the table when considering how to stablize the systems. "It is not an option he has embraced," Schuh said of Brady, nor is it an idea he has given serious consideration at this time.

Quinn campaign spokeswoman Mica Matsoff said the governor will not "stick the taxpayers of this state with $50 billion of debt that would take generations to pay off. This is another reckless idea from Bill Brady, who doesn't have a real plan, but just makes it up as he goes along."

But if the pension bond option ever were pursued, Schuh said, it would have to be part of a major pension deal with a full financial plan and repayment schedule rather than "like Blagojevich and Quinn, just borrowing to borrow."

Quinn signed into law a pension overhaul this year that focused on making it tougher for new employees to get the benefits. It's a law Quinn has estimated saved him hundreds of millions of dollars in the current budget and hundreds of billions of dollars over time.

Facing a major pension system deficit of his own, Christie said he has refused to fund a broken pension system but has proposed a series of ideas to cut costs. "Until the legislature wants to get serious about real pension reform, I'm not going to continue to pour good money after bad," Christie said.

Christie said what works in New Jersey might not be the best option for Illinois, saying that would be up to Brady if he is elected governor. Christie recently came into office with an $11 billion state budget deficit, similar to the $13 billion annual deficit facing Illinois. He cut billions out of New Jersey's budget, including nearly $1 billion from school funding when federal funds dried up. In a debate last week, Brady said he expected school funding cuts to be less than $1 billion in Illinois if he is elected.

"I'm confident that Bill is taking this state in the direction that says we have to be more fiscally conservative, we have to lower spending and we have to reduce the intrusion into people's lives," Christie said.

Quinn's campaign issued a statement critical of Christie because his budget resulted in cutting teacher positions, hurting working families and granting billions of dollars in tax breaks to corporations. But the Quinn campaign did not have an immediate comment about the option of a major pension bond.