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GOP rejoices over debt control act
By KERRY L. SMITH

   Illinois Senate Republicans are hailing the state's first competitively bid bond sale since 1999, made possible by a new law they hope will put an end to Gov. Rod Blagojevich's practice of back-loading debt.

   The sale on Sept. 22 of $285 million in general obligation bonds at a near-record, historically low interest rate of 4.19 percent is the first tangible outcome of the FY 2005 Budget Implementation Finance Act, signed into law July 30.

   Republican Sen. Christine Radogno from Lemont, the chief sponsor of the legislation, introduced a version of the bill in February - SB 3097, dubbed as the Debt Responsibility Initiative - in an attempt to control the governor's long-term spending habits. It didn't make it out of committee.

   But her reintroduced bill (SB 2206), which became law, requires that bonds sold by the state must be repaid in level (equal) principal amounts. Prior to July 30, the governor was able to delay bond repayments many years with a back-loaded repayment schedule - terms in which the largest portions of the debt come due toward the end of the repayment period.

   The law also stipulates that repayment of some bonds must begin immediately and all bonds must be repaid within 25 years, rather than 30 years as was the status quo.

   "Our requirement for level principal repayments puts an end to Gov. Blagojevich's irresponsible practice of pushing bond payments off for several years until he is out of office and leaving huge payments for our children," Radogno said. "With this law, we've essentially eliminated the state's 'debt holidays.'"

   The new legislation also prohibits the state of Illinois from contracting with investment banks or other firms which have hired lobbyists on contingent fees, she said.

   "It also requires full disclosure of the bond contracts and repayments," Radogno added.

   Sen. Frank Watson, a Republican from Greenville, joined Radogno and bill co-sponsors in February to push the legislation. Watson insisted on its enactment as part of the budget agreement.

   "In his first year in office, Gov. Blagojevich more than doubled the state's general obligation bond debt," Watson said. "He sold new bonds without providing revenue to cover the money he borrowed, and he steered more than $40 million to political insiders through a no-bid process. This law puts an end to all of that."

   Another clause in the law keeps the governor from borrowing extra money to cover interest payments, Watson said. It also mandates that taxpayers and legislators have easy access to information about the total costs of the governor's bonding plans by requiring "truth in borrowing disclosures."

   Sen. Steve Rauschenberger from Elgin, assistant Republican leader, was a co-sponsor of the debt responsibility bill.

   "In early 2003, we were asked to vote on a massive pension bonding scheme with little or no information about how it would work," he said. "Senate Republicans protested then that it was not responsible to vote on a massive bond sale and effectively double our debt without having more information about how it would work. This law forces the current governor to take responsibility so that future generations will not pay a higher price."

   Sen. Chris Lauzen, a Republican from Aurora, a minority spokesman on the House revenue committee and a co-sponsor of SB 2206, said bringing an end to the state's no-bid bond sales is huge.

   "The governor paid $40 million to political insiders through these no-bid bond sales," said Lauzen. "That is twice as much in fees to bond insiders in just one year as the (former Illinois Gov. George) Ryan administration paid in bond fees over four years."

   State Rep. Jay Hoffman, a Democrat from Collinsville, said Blagojevich and fellow Democrats agreed to a number of the provisions of the debt responsibility bill.

   "Many of the debt responsibility provisions the Senate put forward the governor agreed to," Hoffman said. "The issue is that capital programs, by their very nature, require long-term bonded indebtedness. As far as I know, we have never, in the history of the state, built roads, institutions or other state properties on a cash basis. Many of these debt provisions that were passed, although the current governor accepted them, came from the previous administration's promises - such as Illinois FIRST - outweighing the funding."

   Three other Democratic state legislators were contacted but did not respond.