Just two weeks after Illinois Gov. Pat Quinn chopped $1.4 billion from the budget, the cash-strapped state is turning to the debt markets to get it through the fiscal year.
On Wednesday, it plans to raise $900 million through Build America Bonds to fund its first capital program in more than a decade. The money will be used to improve roads, bridges and schools.
And this debt issuance is only the beginning. The state plans to raise $1.3 billion in short-term notes next week and $1.4 billion in debt related to tobacco settlement funds in November.
And, the state plans to turn to the debt markets to fund $3.7 billion in pension obligations in December, if the state legislature approves. The state already sold $2.4 billion in pension notes in January.
States don't traditionally fund their pensions with debt, but the practice frees up other money that can be used for operations, said John Sinsheimer, Illinois' director of capital markets. |