CHICAGO – Because the national recession has negatively affected Illinois’ revenue and caused a $2 billion fiscal year 2009 budget deficit, the State will be selling $1.4 billion in general obligation certificates to infuse the General Revenue Fund with much needed cash to pay vendors and providers who urgently need payment.
“We are pleased to be taking this step to help the state speed payment to many organizations and agencies that have provided care for seniors, healthcare to children, or other critical services and have been waiting to be paid. Together with the Comptroller’s, Treasurer’s, and Attorney General’s offices, we are able to fulfill our commitment to these organizations,” said Ginger Ostro, Director of the Governor’s Office of Management and Budget.
The Office of the Governor, the Office of the Comptroller, the Office of the Treasurer, and the Office of the Attorney General have worked together on this short-term borrowing transaction which would immediately put cash into the State’s accounts so that the Comptroller can pay bills more quickly.
In addition to the state receiving less revenue than the budget projected, the state also has an uneven cash flow. This means that more dollars will come into the state during March, April and May. The short-term borrowing will allow the state to pay many bills now that have been pending, rather than waiting for this spring when additional money comes in. While short-term borrowing will not solve the budget deficit, the state needs to pay vendors and manage the uneven cash flow.
In May 2003, the state borrowed $1.5 billion to pay Medicaid assistance, medical providers of long term care, the refund fund, and state aid payments to K-12 schools. Short-term borrowing has been used in other years since to manage cash flow and ensure the state’s payment obligations are met in a timely manner.
Illinois is not alone in facing a FY09 budget shortfall due to lower than projected revenues. At a recent meeting with President-Elect Barack Obama and the nation’s governors, Chairman of the National Governors Association, Governor Ed Rendell of Pennsylvania, said 43 of 50 states currently face budget deficits.