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Governor Rauner today announced pricing on $750 million bond issue, mostly for capital expenditures. The full press release is below.

Capital spending in Illinois is a history of pork and political favoritism. The last big program was called “Jobs Now” under Governor Quinn. I wrote about some of the waste as it was announced, hidden in a Thanksgiving Eve announcement three years ago. Coulda saved the state millions if anybody had listened, , as explained here, but the press ignored it. Kristen McQueary of the Tribune also wrote a great piece last fall on why to beware of “pork disguised as capital” in Illinois.

So, who will oversee how this new money is spent?

Governor Rauner? He has firmly established himself as incompetent and detached.

Republican lawmakers? Many of them have been part of the sorry history, including Senate Minority Leader Durkin, who championed that Jobs Now program under Governor Quinn.

Democratic lawmakers? They’re probably already on their third cocktail, celebrating with the recipients.

One bit of hope is that $95 million of the bonds will go to tech projects, which hopefully means that’ through DoIT, the Department of Innovation and Technology. They’re very competent, and have done a great job identifying tech improvements to state operations that pay for themselves in the long run.

Mark Glennon is founder of Wirepoints. Opinions expressed are his own.

Office of the Governor

Bruce Rauner

For Immediate Release

Wednesday, November 29, 2017

State of Illinois prices $750 million in bonds

CHICAGO (Nov. 29, 2017) — Today the State of Illinois priced $750 million in new money General Obligation bonds for 2018 capital expenditures. Bond proceeds will be used to fund major capital construction projects and finance information technology projects.

The General Obligation bonds were priced competitively in two separate bids:

  • The $655,000,000 Series of December 2017A fixed-rate bonds with a final maturity in 2042 will be used to fund major capital construction projects. The 2017A bonds received eight bids and the bonds were awarded to Bank of America Merrill Lynch with a true interest cost of 4.33 percent.
  • The $95,000,000 Series of December 2017B fixed rate bonds with a final maturity in 2027 will be used to finance information technology projects. The 2017B bonds received 10 bids and the bonds were awarded to Bank of America Merrill Lynch with a true interest cost of 3.71 percent.

Today’s bond issue has an all-in borrowing cost for the combined series of 4.29 percent. The bonds are being issued as fully tax-exempt from federal taxation and are rated “BBB” by Fitch Ratings, “Baa3” by Moody’s Investors Service and “BBB-” by S&P Global.

“We are very pleased with the strong response that the State received on today’s competitive bids,” said Scott Harry, director of the Governor’s Office of Management and Budget. “These transactions will allow the State to move forward with funding to address essential capital and infrastructure needs at an attractive interest rate.”

Chapman and Cutler LLP and Hardwick Law Firm LLC are acting as co-bond counsel for the State. Chapman and Cutler LLP is the State’s disclosure counsel. The State’s financial adviser for the transaction is Sycamore Advisors LLC.

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There should be a state law requiring posting of planned and actual expenditures by project on a public website for such bond issues.

It is too easy to obligate taxpayers for unknown future purchases.