Wrong time to borrow $70 million

If sales tax revenue rallies, and if property values head back up, and if the state pays what it owes, and if the economy expands, a plan by DuPage County Board Chairman Bob Schillerstrom to borrow $70 million for capital improvements might be recalled a couple decades from now as a stroke of genius.

Unfortunately, all of those indicators are shaky at best, making Schillerstrom's borrowing plan too big of a gamble for taxpayers who would carry the loan costs for the next 30 years.

At its meeting today, the county board needs to pare back its "to do" list and scale way back on the borrowing proposal.

While a federal economic recovery program that would drop the county's interest rate to about 3.2 percent is attractive, it should be restricted to borrowing for critical needs.

Schillerstrom's proposal includes several red flags.

Chief among them: Reliance on the state's word that it will catch up by the end of this year on what it owes to the county for sales tax, income tax and other reimbursements. With Illinois in the worst fiscal mess in its history, it's folly to base financial decisions on those assertions.

County board members should be wary of the loan's balloon payments, which jump to $5.9 million a year for most of the last half of the 30-year loan, compared to $2.3 million a year initially.

The county "can't afford" the higher initial payments required to keep the repayment schedule level, says Fred Backfield, DuPage County's chief financial officer. Schillerstrom says current debt will be paid off in a decade, making the balloon payments possible without any tax increase.

Continuing economic turbulence dictates a more conservative approach: If the county can't afford it now, it can't afford it.

We also question the need for $40 million of the loan to go to the county government campus in Wheaton, including $11.7 million for emergency generators for the entire campus and $11.1 million for technology upgrades. While the county board already has approved building the generators, it's a hard sell to allot $1.8 million more for campus emergency power than for flood control across the entire county. And given the pace of technological advances, taxpayers will be covering the costs of the tech upgrades long after the new operating systems have been relegated to the Smithsonian.

In several towns, borrowing plans have led to taxpayer revolt: Critics of taking out a $27 million loan in Palatine Township Elementary District 15 got 7,500 petition signatures and forced a referendum. Taxpayers opposed to borrowing $20 million for a Batavia Park District recreation center also got it put up for a public vote.

Those cases provide a lesson for Schillerstrom and the DuPage County Board, who should step back from this borrowing plan.