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Rutherford threatens action to stop borrowing
From Lee Newspapers & CNBC
State Treasurer Dan Rutherford threatened on Monday to short circuit attempts by Illinois lawmakers to borrow money to pay down a massive backlog of bills.
Rutherford, a Republican in his first term, said he doesn’t have the constitutional power to stop a long-term borrowing plan favored by Gov. Pat Quinn and some Democrats in the House and Senate, but he said he would call bond houses and financial rating firms to outline how deep the state is in debt in an attempt to derail them from lending the state money.
“If I need to send letters to the rating companies to tell them the treasurer of Illinois is opposed to more borrowing, I’m going to do that,” Rutherford said. “We need to cut our spending and break our unsustainable borrowing cycle before we realize a further financial disaster.”
Rutherford said the debt from past borrowing has risen to $45 billion in recent years. That figure represents about $10,000 for every household in the state.
His comments came as lawmakers resurrected a dormant borrowing plan in hopes of getting a quick infusion of cash to begin paying off vendors, hospitals and others who have done business with the cash-strapped state.
Quinn has proposed borrowing over $8 billion to pay down the backlog, but the new legislative effort appears to be significantly smaller.
“I think reasonable borrowing to pay back bills to vendors is something that will be moving forward,” said state Rep. Frank Mautino, D-Spring Valley.
The governor’s budget office is dismissing GOP concerns about additional borrowing by calling it a “debt restructuring” effort that could help offset major cuts to state programs.
“This is not further borrowing. Our plan includes restructuring debt the state already owes and using that money to immediately pay vendors and service providers who have been waiting months for payment,” said budget office spokeswoman Kelly Kraft.
Rutherford acknowledged that, as a former senator and member of the Illinois House, he supported at least some of the previous borrowing measures that added to the debt load.
But, he said he backed those proposals because he believed there was an adequate plan in place at the time to manage the debt.
“It was supposed to have been paid back,” Rutherford said.
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