SPRINGFIELD - Gov. Pat Quinn's top aides admit that borrowing to balance state spending isn't a great option, but claim it's the best of the bad choices left at this point.
State lawmakers have been unable to agree on tax increases or massive cuts to try to wipe out a nearly $13 billion deficit. Borrowing billions to make needed pension payments also was rejected when lawmakers last met at the Capitol.
As they prepare to head back for another round of budget votes, Quinn's budget team met with the Daily Herald to try to explain why borrowing is the most fiscally responsible move.
Quinn's Chief of Staff Jerry Stermer pointed out that the state can borrow at a 4.5 percent interest rate, whereas if the pension payment is shorted, the state is automatically hit with 8.5 percent interest in making up the shortfall. And pushing off billions in state payments to vendors to make the budget look balanced incurs a 12 percent interest rate under late-payment laws.
Given those choices and the rejection of other proposals, Stermer said borrowing at 4.5 percent makes the most sense.
"Our analysis is we ought to do the most fiscally conservative thing," he told the Daily Herald editorial board.
The problem is the state borrowed $3.5 billion last year to make the pension payment. Plus, whenever the state runs up debt, it requires the support of 60 percent of lawmakers rather than a simple majority. In the House, that brings Republicans into play in the Democrat-dominated General Assembly. Assuming all House Democrats vote for a borrowing plan - something so far they've not done - they would still need at least one Republican vote to approve it.
So far, Republicans see little reason to go along, saying deeper cuts and efficiencies are needed to lure their votes. They were united in rejecting a pension-borrowing plan earlier this month.
"Nothing has changed since May 7 when we voted 'no,'" said Sara Wojcicki, spokeswoman for House Republican leader Tom Cross of Oswego.
The Illinois House is scheduled to return to the Capitol on Monday and continue its session through Wednesday, when the Illinois Senate is due back.
They face a May 31 constitutional deadline to approve a budget, or else the super majority requirement for passage kicks in. However, given the likelihood of borrowing in the plan, that already appears to be a requirement. The new budget year begins July 1.