CHICAGO - Gov. Jim Edgar of Illinois has resurrected his plan for a $300 million short-term cashflow borrowing, after taking action last weekend that will likely end the state treasurer's opposition.
On Sunday, the governor agreed to accelerate a $176 million state-aid payment to schools that advanced the Chicago Board of Education its $43.2 million share. That money helped eliminate the $84.6 million deficit in the board's fiscal 1993 budget.
The governor had opposed advancing the payment, claiming that the Chicago school board had not done enough to bring its finances into balance. That led to state Treasurer Patrick Quinn's opposition to the borrowing unless part of the money was used to help bail out schools.
Under the state's Casual Deficits Act, any short-term borrowing must be approved by the comptroller, the treasurer, and the governor.
Dan Egler, the governor's spokesman, said Gov. Edgar decided to proceed with the $360 million of short-term general obligation certificates now that the obstacle to the treasurer's support had been removed. He said a formal proposal would be made soon to the treasurer and state Comptroller Dawn Clark Netsch.
Marj Halperin, a spokeswoman for the state treasurer, said yesterday that the treasurer was now, interested in the borrowing because of the accelerated payment to the schools. However, she pointed out that the treasurer would want specifics on how the proceeds would be used and how the state plans to pay back the debt.
"If it's a sound proposal, the treasurer will certainly sign on." Ms. Halperin said.
Rick Davis, a spokesman for Ms. Netsch, said yesterday that the comptroller was "absolutely" in favor of the borrowing plan. He pointed out that on Tuesday the comptroller's office had a backlog of $453 million of bills to pay.
Gov. Edgar had proposed the $30O million general fund borrowing along with a $600 million Medicaid-related borrowing in July, shortly after signing the state's $14.5 billion general funds budget for fiscal 1993.
State officials said the money was needed to help pay an estimated $1 billion of fiscal 1992 bills that the state rolled over into fiscal 1993 under a practice called lapse-period spending.
After the three constitutional officers agreed to the $600 million borrowing, the issue was competitively bid on Aug. 13. The governor, however, scrapped plans to borrow the additional $300 million due to the treasurer's opposition.
The sale of the $600 million of GO certificates last month triggered reviews of the state's financial condition by the rating agencies.
At that time, Standard & Poor's Corp. downgraded, the state's GOs to AA-minus from AA and Moody's Investors Service lowered its rating to Aa from Aa 1.
Standard & Poor's cited Illinois' continued weak financial operations and liquidity position for the downgrade, while Moody's pointed to "a substantial deficit" the state has been accumulating over the past several years.
The certificates were rated SP-1-plus by Standard & Poor's and MIG 1 by Moody's.
Mr. Egler said the $300 million borrowing would be paid off by June 30, the end of the state's fiscal year, and that it would be competitively sold.