Illinois Comptroller Susana Mendoza urged Gov. Bruce Rauner today to act quickly to use his new bonding authority to access up to $6 billion to help pay down the state's $14.6 billion backlog of past-due bills.
Rauner was given the authority to seek the bonds by the budget bill legislators passed earlier this month over his veto.
Speaking to the Daily Herald editorial board, Mendoza, a Chicago Democrat, said the state is getting hit with $2 million a day in late-payment interest penalties because of the record backlog.
"It's really important to get to market as quickly as possible," she said.
Mendoza's urgings come on the heels of the same recommendation by state Treasurer Michael Frerichs, a Champaign Democrat, who said having bonds issued is one of a number of steps that Illinois can take to avoid a "junk" rating by major credit agencies.
The state's recently passed $36 billion spending plan is funded in part by an increase to the individual income tax rate to 4.95 percent, up from its previous 3.75 percent, and an increase to the corporate rate to 7 percent from 5.25 percent. Those increases are estimated to bring in an additional $5 billion a year. In giving Rauner the authority to implement the state budget, the legislature also provided the governor with the authority to have a certain amount of bonds issued, in this year's case, $6 billion. To date, Rauner hasn't signaled how or when he's planning to act.
Rauner's spokeswoman, Laurel Patrick, said in a Monday evening statement that the "budget implementation bill provides the authority for Comptroller Mendoza to reallocate cash in the state treasury to address debt. Paying down the state's bills is a top priority for the governor and we will be working with her directly to identify available funds that should be used to address this debt."
Additionally, Patrick said, the governor's office was "reviewing the budget to identify ways to cut expenses to further pay down the bill backlog" and would continue to advocate for reforms to prevent the state from further accumulating debt.
"The tax revenues from the increase will go toward balancing the budget, but (that) doesn't help to pay down the bill backlog," Mendoza said. "We want to pay that as quickly as possible."
Mendoza's comments came the day the Republican governor called lawmakers back to a special session in Springfield in order to resolve an impasse over legislation that would release school funding dollars to districts by the start of the school year.
While lawmakers passed a budget for the first time in over two years in early July, that budget came with a catch -- unless Rauner approves an "evidence-based" school funding formula, state money won't flow to schools.
Mendoza said the fight over school funding is distracting attention from the urgency of paying down the bill backlog.
"The markets are looking at whether or not Illinois is moving in the right direction," Mendoza said. "Anybody in their right mind would say a long protracted battle on a school funding reform battle that actually has an impact on property tax rates across the state matters. That is not good for the state of Illinois."