CHICAGO -- Illinois State Treasurer Patrick Quinn yesterday grudgingly agreed to the competitive offering of $900 million of short-term general obligation certificates, marking the last of three approvals needed for the sale.
Quinn "reluctantly" approved the borrowing, "noting the state's obligations to pay its bills," according to a press release from the treasurer's office.
In the same statement, Quinn called for a commission to study state borrowing practices. In addition, he proposed that all state debt be sold competively.
Under Illinois' Casual Deficits Act, any short-term borrowing must be approved by the governor, the treasurer, and the comptroller.
Gov. Jim Edgar had called for the borrowing earlier this month as the legislature finished work on the state's $29.9 billion fiscal 1994 budget, which began July 1.
Edgar has said the money is needed for cash-flow purposes because the state spends more money than it receives in the first six months of the fiscal year.
State Comptroller Dawn Clark Netsch came out in favor of the borrowing after it was proposed by the governor due to the backlog of fiscal 1993 bills in Netsch's office.
The state will issue $600 million of certificates payable from the general fund and $300 million of certificates payable from Medicaid assessment fees and federal Medicaid matching money around Aug. 12, according to Ellen Feldhausen, a spokeswoman for the state Bureau of the Budget.
Both issues will be competitively bid and paid off by June 30. 1994, the end of the fiscal year.
Quinn pointed out the borrowing will mark the third time the state has tapped the short-term debt market since fiscal 1992. He said the state will have borrowed $2.5 billion at a total interest cost of $45 million.
"Our obligation to our vendors is to pay our bills," Quinn said. "But our obligation to the taxpayers is to live within our means, to control spending before the bills pile up."
To that end, Quinn proposed the formation of an independent, volunteer taxpayer commission to review state finances "as a step toward breaking the cycle of annual borrowing to pay the state's bills."
The treasurer said the 12-member commission would make initial recommendations by Oct. 12, the date the General Assembly convenes for its fall session. A final report would be due by April 15, he said.
Among other things, the commission would be responsible for reviewing the Casual Deficits Act along the lines of a reform bill that failed to pass the legislature in the spring session. That bill would have placed restrictions on the state's short-term borrowing, including requiring a written report on why the borrowing is needed and what corrective measures could be taken to avoid the need for borrowing.
Dan Egler, Edgar's spokesman, said the governor agreed to take a look at Quinn's proposal.
For the longer term, Quinn called for competitively bidding all long-term debt. He did not specify the type of debt, such as whether state authority debt would be included under the proposal.
Currently, the state's Bureau of the Budget must competitively sell all general obligation debt with the exception of refunding and college saver GOs.
Build Illinois sales tax revenue and civic center debt can be sold in negotiated deals. State bonding authorities generally sell all of their debt in negotiated deals.
A bill Quinn promoted that would have required specific state authorities to competitively bid their debt was not approved in the legislature's spring session.
The governor's office and the budget bureau are in the process of selecting underwriter and bond counsel firms to handle the state's bond business in fiscal 1994 and 1995.
James Montana, Edgar's chief legal counsel, said yesterday that the selection of firms should be completed by the end of the month or early next month.