From the Comptroller

This issue of Fiscal Focus examines the State of Illinois’ long-term debt. While it is not a glamorous topic, the management of long-term debt is a vitally important issue for both current and future Illinois taxpayers.

Illinois' Long-Term Debt

This article provides an overview of the direct long-term debt of Illinois (i.e., general obligation and special obligation bonds). At the end of fiscal year 2007, $19.9 billion in general obligation bonds was outstanding, including $10 billion of general obligation pension funding bonds.

Pension Obligation Bonds: A Four-Year Review

On June 12, 2003, Illinois issued $10 billion in pension funding general obligation bonds with maturities of up to 30 years. The bond proceeds provided funds to the state pension systems, as well as monies for budget relief during fiscal years 2003 and 2004. The pension systems’ share was $7.3 billion allotted to the five systems in proportion to their unfunded pension liabilities.

No Major Bond Authorizations - Infrastructure Needs Grow

The last major bond authorization increase was the Illinois FIRST capital plan in fiscal year 2000. The last significant increase in bond authorization was in the spring of 2002. Recently there has been a noticeable decline in capital projects and an increase in the backlog of needed infrastructure improvements as the authority to issue bonds nears depletion.

Student Loan Debt Reduced

During calendar year 2007, ISAC decided to reduce the scope of IDAPP, increase the percentage of funds used for loans to Illinois residents, and gain funds for other student assistance programs. IDAPP’s first sale of $648 million in loans in January 2007 led to a 17.3% decrease in outstanding IDAPP debt to $3.5 billion at the end of fiscal year 2007. ­Additional debt sales of $1.38 billion in July and $1.03 billion in August 2007 followed.

Bonds Used to Fund Environmental Protection Programs

As of June 30, 2007, under the GO Bond Act, IEPA had $319.8 million authorized for grants or loans to local governmental units to be used in accordance with the Federal Environmental Protection Act, of which $7.8 million was unissued. Additionally, $160.5 million was allocated for use in the Leaking Underground Storage Tank (LUST) Program, a separate part of the Environmental Protection Act, of which $15.8 million was unissued.

State Debt Burdens

One factor in the fiscal health of a state is its total net tax-supported debt. The impact on the states’ health can be measured by the burden this debt places on the taxpayers through the debt per capita amount and the percent of the state’s personal income that this debt reflects.

Revenue Bonds

Revenue bonds of state agencies can be classified into three major types. The majority are basic revenue bonds or conduit debt which pledge only the revenues derived from the facilities constructed and are issued without any commitment on the state.

Did You Know

Click here to test your knowledge concerning Illinois bonds and long-term debt.

Vital Statistics - January, February, March 2008

General funds revenues and expenditures for January, February and March 2008.

HYNES: GOVERNOR SHOULD KEEP HIS PROMISE TO HIGHER EDUCATION

HYNES: GOVERNOR SHOULD RESTORE 4-H FUNDING

HYNES TAKES ACTION AGAINST SELLER OF INSURANCE-FUNDED PRENEED FUNERAL BENEFIT CONTRACTS

American Mausoleum Q & A