State's in hole, Quinn still digs

Another state borrowing bender could be just around the corner.

After borrowing the first $2.25 billion, it must get easier – the borrowing that is. Paying off the debt gets even harder.

But that doesn't seem to be slowing down Gov. Pat Quinn. He announced last week that he wants to borrow another $900 million or maybe it's another $1 billion. He's not sure – details, details.

Quinn said the additional borrowing is necessary because "we have to have that just to have liquidity for the months of November and December, January and February." He asserts that "it's just a matter of cash management."

There's no question that borrowing is a common practice among many well-run operations, both public and private. Revenue really does ebb and flow, making borrowing a practical reality in some cases.

But Illinois' practice of this kind of borrowing is not just getting tiresome but dangerous.

According to the state comptroller's office, Illinois borrowed $1 billion to cover short-term cash flow contingencies in May and another $1.25 billion in August. State law mandates that this type of borrowing be quickly repaid, and the repayment schedule for the $2.25 billion is demanding – $500 million in March 2010, $750 million in April 2010, $500 million in May and the final $500 million in June.

So on top of that, Quinn is seeking to borrow another $900 million to $1 billion that will have to be repaid by the end of the fiscal year.

Given the state's mind-boggling budget problems and projected revenue shortfalls, the logical question to ask is, "Repaid with what?"

In addition to the short-term debts of $2.25 billion, the state already has $3.7 billion in unpaid bills.

Illinois law requires that Quinn's plan be approved by state Treasure Alexi Giannoulias and state Comptroller Dan Hynes.

A Giannoulias spokesman said the treasurer has not taken a position on the borrowing but said "the state can ill afford to get further into debt."

According to the comptroller's spokesman, Hynes will "wait and see what the governor has in mind" but so far has received no indication how the money will be spent and, more importantly, how it will be repaid.

Quinn has been notably vague about much of the spending, suggesting it's just for routine expenses until January revenues kick in. But part of the spending should make the hair on the back of taxpayers' necks stand up.

Remember the MAP grants issue the Legislature addressed a couple of weeks ago. The grants help students at public and private schools pay their tuition.

Quinn initially eliminated the MAP grants for the second semester as part of his budget cuts. Then students and college administrators complained so much that Legislature approved the second-semester grants but left it to Quinn to find the necessary $200 million. Quinn decided to borrow it.

This kind of approach to state finances would be comical if it wasn't catastrophic.

Maybe Quinn believes that January's quarterly state income tax payments will bail the state out of this disastrous debt. Maybe he's counting on a post-Feb. 2 primary election income tax increase to produce the necessary funds. But Quinn and the state legislators who support more borrowing look like they are relying more on hope than reality.

Maybe it'll all work out somehow, someway. But if it doesn't, what then?

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