Plan to pay debt is snow job

Our governor seeks support for a debt restructuring plan to pay Illinois’ bills promoting Senate Bill 3. He says the tax increases to individuals and businesses of 67 and 46 percent, respectively, that he “signed into law this month are only half of the package.”

Now he wants to borrow $8.75 billion in 14-year general obligation restructuring bonds to pay off the unpaid bills.

However, only $7.3 billion in proceeds would go to pay old bills. The governor’s budget office disclosed that $1.45 billion is planned for increased general fund expenditures next year. The state also plans to delay payment of principal and interest on the bonds until 2015 and 2016 when part of the tax increase is expiring.

Folks, it is poor financial policy to borrow long term to pay for operational expenses. Secondly, delaying payment of principal and interest will add $3.4 billion in interest.

In addition to a $10 billion tax increase over the next two years, the state has already filed a pension bond offering for $4 billion this month for the annual pension contribution payment. Since Illinois has only funded 43 percent of its pension liabilities and lots of unpaid bills, Illinois will have to offer a very high interest rate.

To summarize our elected officials’ plans this month — tax, borrow and borrow and spend more tomorrow. Where does the $10 billion go? Interest costs for debt — $6 billion. Incremental spending — $1.45 billion. The balance isn’t enough for next year’s $4 billion pension contribution.

You talk about a February “snow job!” — not one word about pension and post retirement health care reform for public “servants (?)” or reining in the state’s social safety net programs we can’t afford.

Sorry, governor, you are not going to “snow” me with your loan shark salesman’s

pitch.

Mike Tennis

Sleepy Hollow