S&P Global Ratings says Illinois should borrow money to pay down its bill backlog.
The agency claims the state can borrow at a lower interest rate than it currently pays on overdue bills (approximately 12% per year). State Comptroller Susana Mendoza says the state runs up to $2 million in interest charges.
The Rockford Register Starreports S&P believes the borrowing is unlikely to improve the state’s credit rating, but could provide protection against a further downgrade.
The state budget approved in July authorizes up to $6 billion in borrowing to pay down old bills. S&P said the spending plan assumes a $360 million surplus that could be used to finance about $3 billion in borrowing. Mendoza’s office wants to use the borrowed money on Medicaid bills — which qualify for federal matching funds — and also on bills that qualify for late payment penalties.
State law requires Gov. Bruce Rauner to initiate the borrowing, but he has so far declined to do so.