Ill. Bond Sale Allows Bill Payment

Bond sale allows State to pay off more than $3 billion in past-due bills. The money was transferred to the Office of the Illinois Comptroller, which was authorized to sign checks to make the payments. The payment cycle reduced the estimated quantity of past-due bills owed by the State from more than $16.5 billion to less than $13.3 billion. Even after this payment cycle, Illinois continues to owe a significant quantity of past-due bills. Illinois has the lowest credit rating of the 50 states, with ratings posted by Moody’s and Standard & Poor’s at the lowest rank available for investment-grade entities qualified to borrow money in the debt markets.

The $3 billion funds transfer resulted from major new bond packages issued and sold by the State in October 2017. The bonds were authorized by the General Assembly and were sold bearing interest rates averaging 3.50%. Sale of the debt was profitable for the State and its taxpayers, as it enabled the payoff of a substantial quantity of Illinois debts denominated as past-due bills. Under Illinois law, past-due bills owed by the State of Illinois that remain active and unpaid for a period of time fall under the jurisdiction of the Prompt Payment Act. Prompt Payment Act debts bear higher interest rates than the interest rates on State bonds, and so it made sense for Illinois to sell bonds to pay back part of these past-due bills.

 

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