Wednesday, March 23, 2011

Quinn floats new borrowing

By Jamey Dunn

Gov. Pat Quinn has pitched more short-term borrowing to help Illinois bring in federal dollars, but the plan is still being formed.

Quinn told reporters in Chicago yesterday that he wants to borrow about $2 billion to capture a temporarily higher rate of federal matching dollars for the Medicaid program. The state must reimburse certain Medicaid providers on a set schedule, so Quinn wants to borrow, in part to help the state keep up with its Medicaid bills.

According to Kelly Kraft, spokeswoman for Quinn’s budget office, the governor actually wants to borrow $1.75 billion. The larger portion of the money, $1 billion, would go to the state’s employee health insurance. According to Quinn’s budgeteers, the state only made about half of the needed payment for employee health care this fiscal year. The rest of the money, $750 million, would be used to pay Medicaid providers in a more timely fashion. Kraft said some federal reimbursement would also be available for money spent on employee health insurance. Quinn said without this plan, the state could potentially lose out on $175 million in federal matching funds. Kraft said revenues from the recent income tax increase would be used to pay off the borrowing. As for when the money would need to be repaid, Kraft said in a written statement that the budget office is still “working on details for that.”

According to Kraft, the borrowing will require legislative approval. Quinn, state Treasurer Dan Rutherford and Comptroller Judy Baar Topinka can approve short-term borrowing if the state fails to capture expected revenues or needs to borrow to supplement cash flow. However, Quinn’s budget office says this borrowing doesn’t fit either of those scenarios, and Kraft said the legislature would need to change the rules for this type of short-term borrowing. Yesterday, Quinn goaded legislators to act quickly. “I think the people of Illinois would be sorely disappointed in a bunch of politicians in Springfield playing political games instead of getting maximum federal money from Washington. We pay a lot of taxes from our state to the federal government. We’re entitled to money back. And if we don’t meet the deadline, we won’t get it,” he said at a Chicago news conference.

Legislative leaders are reviewing the plan. “We will take a look at the governor’s recent proposal — and take it to our caucus. In the short term, it is our understanding that the governor is working with the comptroller and treasurer to pay down $600 million in Medicaid bills through March to capture some of those federal funds. … We remain committed to paying the bills that we owe, as well as remaining committed to making cuts, efficiencies and structural reforms to stabilize our state budget,” Sarah Wojcicki, spokesperson for House Minority Leader Tom Cross, said in a written statement.

Quinn emphasized that he continues to support a proposal to pay down the state’s backlog of bills, which his budget office tallies at more than $8.75 billion — including the insurance payment, overdue corporate tax refunds and other costs. That borrowing would be paid back over 14 years and would also be funded by the recent income tax increase. “It’s not like we’re borrowing new money. Our state owes money already to many small businesses — to Metra that runs the trains [in the Chicago area,] to universities like the University of Illinois. We already owe the money. … We think it’s better that the state of Illinois bear that burden rather than have all these small business that employ people have to wait six [to] eight months to have their bills paid,” Quinn said.

Senate Republicans say, however, that the state can pay down its bills without borrowing if lawmakers would cut about $5 billion from Quinn’s budget proposal for the next fiscal year.


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