Illinois credit rating sucks, which is unfortunate for the Sucker State, because it needs to borrow millions of dollars to pay its bills. This means that the state is paying a premium for the loans, which are going to be used to improve roads, bridges and schools. As a product of Illinois’ public schools, I can honestly say that the $900 million in new bonds it is issuing will not be enough. Whether this is because we are too poorly educated to figure out how much money is actually needed, or because it really isn’t, no one can say.
From the Chicago Tribune:
The latest bond issue is only a fraction of what could add up to $9.3 billion in long-term borrowing this fiscal year, on top of $8.9 billion in such borrowing last year. Those sums are topped only by borrowing in fiscal 2003, when then- Gov. Rod Blagojevich pushed through a record $10 billion bond sale to prop up the state employee pension funds.
“Every time Illinois comes to market, the premium they have to pay gets higher because the market experiences Illinois debt fatigue,” said Brian Battle, a director at Performance Trust Capital Partners LLC, a Chicago-based fixed-income investment adviser.
“These are costs Illinois will be paying for decades to come,” said Josh Barro, a senior fellow at the Manhattan Institute, a free-market think tank.