(CBS) – Illinois Gov. Bruce Rauner said Thursday that he will use authority given to him in the state’s budget compromise to borrow $6 billion to pay overdue bills.
The governor indicated, in a statement, he will identify “several hundred million dollars in possible spending reductions” to pay the interest charges.
Civic Federation President Laurence Msall tells WBBM the borrowing makes sense for one reason. He said that the interest rate of around 6 percent is less than the growing late payment penalties, which are running between 9 and 12 percent.
But Msall says the 6 percent rate is twice what a government he considers “well run” would pay.
Illinois has the nation’s worst credit rating. Msall said that once the bonds are issued, the state must rein in its spending and live within its means.
Allowing the backlog to grow again would be What would be “unconscionable,” he says.
Rauner said he wants “Wall Street” to carry the state’s debt instead of “Main Street Illinois.” Msall said, with all of that interest, the average Illinoisan will pay more.
Details are being worked out. Rauner’s office said the bonds must be sold by year’s end.