Though the bond rating was lowered, Moody’s did note that Illinois possesses several “credit strengths,” including a strong ability to raise revenue and reduce expenditures. It also noted Illinois’ diverse economy with higher-than-average wealth levels is an asset.
However, Moody’s said the state’s reliance on delaying payments to vendors, Illinois’ extremely large unfunded long-term liabilities—including pensions and retiree health care—and its use of non-recurring resources to finance state spending, pose serious risks to the state’s rating.
Despite these issues, Moody’s highlighted progress in certain areas—specifically, a bipartisan pension reform measure that reduces benefits for new state employees. Moody’s also cited new revenue generators related to video gaming, vehicle fees and taxes on alcoholic beverages and other products, which will go to help finance debt related to the state’s capital improvement program.
HAVING TO BORROW TO COVER LACK OF STATE FUNDS
Struggling to make payroll and meet their obligations, the state’s universities and community colleges will now be allowed to borrow cash to get by until the state comes through with the hundreds of millions of dollars owed to the institutions.
Signed into law during the week, Senate Bill 642 authorizes public universities to short-term borrow up to 75 percent of what the state owes them for Fiscal Year 2010. The emergency loans must be repaid within one year, or within 10 days of the state’s reimbursement to the university. The short-term borrowing must be finalized within 90 days of the legislation being signed into law.
Senate Bill 2615 doubles the amount community colleges can borrow from their working cash reserves in the form of bonds. It also allows the schools to establish a line of credit with a financial institution.
I understand that universities and community colleges need the money to pay bills, but I did not vote for the legislation because more borrowing only further exacerbates the state's financial mess. Springfield needs to stop avoiding the tough decisions that must be made to bring our spending in line with our revenues.
IMPROVING TRAVEL BETWEEN ILLINOIS AND INDIANA
Another new law will allow Illinois to move forward with the “Illiana Expressway”—a new route connecting I-55 in Illinois and I-65 in Indiana.
Both the Illinois and Indiana legislatures advanced measures that will allow the states to enter into public-private agreements with private contractors who will develop, manage and construct the route.
Indiana and Illinois will work together on the project as it progresses. It is anticipated that construction and development of the Illiana Expressway will create thousands of short-term and long-term jobs, while also relieving congestion in the region.