Responsible Restructuring

Countless articles have been written on the budget crisis in Illinois: the dire financial situation, the growing pile of unpaid bills, and the countless service providers, schools, and hospitals that were either making major cuts or closing their doors altogether.

In January, when the legislature voted to increase the Illinois personal income tax from 3% to 5%, it seemed like Illinois was finally getting its house in order, so to speak. However, when the 96th General Assembly adjourned on January 11th, they left one crucial bill on the table. The comprehensive plan to achieve fiscal stability had included not only new revenue but also the issuing of debt restructuring bonds, so that the state could pay back the billions of dollars it owes to agencies, hospitals, schools, and businesses. In fact, the tax increase legislation specifically designated a portion of the new revenue to go towards the paying back the debt-restructuring bond. Unfortunately, the House failed to pass the bill and thus, the Senate never even got a chance to consider it.

Now, it is truly a new year and a new General Assembly – and the process begins again! Senate Bill 3 (sponsored by Senate President Cullerton), if passed, will allow the state to issue debt-restructuring bonds during FY11 and FY12. The revenue from these bonds would enable the state to pay down its backlog of bills. According to the Governor’s office, this number is at least $6 billion and continues to grow. Without debt-restructuring, the bills will be paid down as new revenue comes in, but that will take a much longer time and will continue to place an undue burden on Illinois’ businesses, schools, hospitals and human service providers.

Paying down the bills more quickly would also improve Illinois’ credit rating. While the tax increase was helpful, Moody’s Investor Services recently stated their negative outlook on Illinois, “primarily reflecting uncertainly surrounding plans to address the state’s large balance of accounts payable.”

So, what’s the hold-up? It seems like some legislators are using the bill as leverage for additional reforms they’d like to see passed – specifically, workers compensation or pension reform – or until “more cuts” are made to the budget, although specifics are often hard to come by. Whether these reforms may be necessary or beneficial is beside the point. The issue is that time is of the essence, and these demands are hindering the passage of a fiscally responsible bill. Passage of SB3 requires a supermajority in both chambers, meaning that members of both parties will need to vote yes.

Legislators are back in Springfield this week and next. Please call both your senator and your representative (legislator look-up) in their Springfield offices. Ask them to support debt-restructuring so that we can pay back providers and businesses. For additional talking points, see the fact sheet from Voices for Illinois Children. The State Journal-Register also ran an editorial highlighting the importance of the bill.

It took the legislature many months to do the responsible thing by voting for a tax increase. Let us hope they will vote for responsible restructuring sooner rather than later.

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