Stroger gets nearly $4 billion in borrowing authority
Thursday, September 18, 2008
by Rob Olmstead
A block of suburban Republicans voted with Cook County Board President Todd Stroger Wednesday, giving him authority to borrow a staggering $3.75 billion by issuing bonds.
While they and Stroger say the move is simply the normal functioning of county government, critic Forrest Claypool said the move is, in large part, a funding of annual costs with long-term debt - the equivalent of a household regularly funding grocery and gas purchases with loans and credit cards.
"If you raise the taxes $426 million and you still can't pay the bills, what's going on?" said Claypool, a Chicago Democratic commissioner. He was referring to the board's recent increase of the sales tax by one percentage point, an annual increase of $426 million atop the 2007 budget of $3.2 billion.
Chief Financial Officer Donna Dunnings said of the $3.75 billion authorized by the board, up to $3.01 billion will refinance the county's entire existing debt at rates that must, by ordinance, be at least 3 percent lower than the current rates on the debt. That, said supporters, will save taxpayers money.
But as for the remaining $740 million, a full $364 million is for pension costs and lawsuit settlements and jury awards, cost that Claypool and others argue should be paid out of annual budgets. The rest is for capital improvement projects, a category of spending that even Claypool agrees should be funded through borrowing.
Of the $364 million, $104 million is for pension obligations. Stroger says that was approved by the county board in the 2007 budget and the payment to the pension fund is due next month. Claypool and fellow critics say the fact that the expenditure was coming out of future bond issuances was not made clear in the 2007 budget. Dunnings claimed her predecessor, former CFO Tom Glaser, made crystal clear to the board that it would have to be paid for with debt.
The other portion of the $364 million is $260 million to replenish the county's "self-insurance fund," the fund that pays lawsuit settlements and jury awards. This year the county had to shell out $100 million to victims of the fire at the county building in 2003, where six people died because stairwell doors did not unlock.
Commissioner Larry Suffredin, who joined Claypool, Tony Peraica and Mike Quigley in voting no, said he was opposing the measure in large part because it gave too much authority to the administration to make the bond deals without supervision. The ordinance, as written, allows Dunnings to make deals at rates as high as 10 percent interest, even though current bond rates are 5 percent.
Dunnings said that figure is simply an upper-end guideline, and bonds could come in even below 5 percent.
But in the volatile market, she said. there is simply not time to bring an actual rate for approval before a board that meets monthly. If the entire $740 million in debt was issued at 5 percent rates in 25-year bonds, the county's annual debt payment of $184 million would grow to $220 million in 25 years.
Republicans voting for the measure were Bartlett's Tim Schneider, Glenview's Gregg Goslin, Elmwood Park's Pete Silvestri and Orland Park's Liz Gorman. Tuesday's vote was delayed several times, with two long recesses and backroom conferences with the four, whose support became shaky after Claypool's news conference on the issue brought out television cameras in droves. After several amendments that Republicans say made the ordinance sound, they voted for it, several hours after it had first hit the floor for consideration.