To help cover Illinois' unpaid bills in the midst of a budget stalemate, Gov. Bruce Rauner is turning to an obscure state agency usually occupied with arranging loans to farms, towns and hospitals.
The Illinois Finance Authority board approved a plan Thursday to withdraw $12 million of its $17 million in investments and use it to provide zero-interest loans to 911 providers throughout the state and cover bills from state vendors for snowplow repair, food for inmates and other "essential government goods and services," Executive Director Christopher Meister said.
The Finance Authority soon may cover still more state bills by issuing bonds. Board members could approve bonds of up to $115 million within the next few weeks, Meister said.
Rauner asked the Finance Authority to make money available as part of a broad request "that state agencies use whatever resources were within their control, within the limits of existing law, to manage through the budget impasse," spokesman Lance Trover said.
Finance Authority revenue comes from fees that hospitals, universities and others pay to issue bonds through the state.
The authority is expecting that the state eventually will approve a budget and appropriate money to pay back the debt.
The unusual arrangement -- the state is essentially borrowing from its own agency -- highlights the accumulating cost of Illinois' ongoing budget impasse. State law requires Illinois to pay interest of 1 percent per month to vendors once bills are 90 days past due. If the Finance Authority takes on those debts, the vendors would be made whole but the state would continue to rack up interest, now owed to the Finance Authority.
That money could help the Finance Authority cover interest on the proposed bonds or make up for interest lost from cashing in the $12 million worth of investments.
The situation "exemplifies the dysfunction and inefficient operations of our current state government," said Laurence Msall, president of the budget watchdog Civic Federation. "We're just creating another level of borrowing which is by definition more expensive than it should be."
The convoluted setup also puts the Finance Authority in the odd position of having to assess the creditworthiness of the state that created it, prompting a quip from board Chairman Rob Funderburg.
"The state of Illinois is discussing the relative risks of doing business with the state of Illinois," he told board members.
Illinois has gone without a budget since July 1 as a result of a deep partisan divide in Springfield. Rauner is pushing an agenda to help businesses and curb union power. Democrats say those plans will hurt the working class.
(c)2015 the Chicago Tribune
