When Bruce Rauner ran for governor of Illinois, he touted his experience as a successful businessman.
Looking at the financial information he released during the campaign, it was obvious Rauner knows what he’s doing in the business world. Illinois was already swimming in debt in 2014, so the call to elect someone well-versed in turning a profit was timely.
While it is perfectly possible for a business person to become a successful politician, the roles are not interchangeable. A business person has more latitude to make changes, sometimes it’s as easy as issuing a memo.
Things get more complicated in public office, especially in an office as powerful as governor. Granted, the office carries executive power, but real change must be made in concert with the General Assembly. We are nearly three years into the Rauner governorship and his relationship with the General Assembly can fairly classified as rocky.
Although the governor’s role is complicated by constitutional constraints on power, the constitution doesn’t impede Rauner from applying sound business principles in all aspects of governing. On the contrary, the governor has done that himself.
In the past month or so, Rauner has made decisions that seem contrary to solid business practices. The reasoning behind the decisions is puzzling to us, as well as most Illinois citizens.
The financial downturn early in this century and questionable financial decisions by the General Assembly and governors of both parties left Illinois sitting on a backlog of $15 billion in unpaid bills earlier this year.
To counteract that stack of bills, the Illinois General Assembly passed an income tax increase this summer – something Rauner campaigned against in 2014. Predictably, the governor vetoed the increase, but the veto was overridden.
This summer, the General Assembly also authorized the governor to issue up to $6 billion in bonds. The sale of the bonds would be used to write down the state’s outstanding bills.
Comptroller Susana Mendoza was outspoken on the need to issue the bonds. She noted that the state was paying 9 to 12 percent interest on the current bills while the debt service on the bonds would be just 4 to 6 percent.
Issuing the bonds and paying down the backlog of bills will save the state $2 million per day, according to Mendoza. To back up her point, Mendoza said the plan was endorsed by S&P Global.
“If we can knock off five or six interest points on this, it’s just a no-brainer,” Mendoza said during a recent interview with The Southern’s editorial board. “This is not a Democrat or Republican thing – this is a sound fiscal policy thing. We’re already borrowing money, it just makes sense.”
Inexplicably, Rauner balked at the notion – although saving $2 million per day seems like a solid business decision. Granted, there is no love lost between the governor’s office and the comptroller’s office. If the governor put politics ahead of the state’s taxpayers, that’s poor business.
“I’d rather stop the bleeding now and get to work on paying that down,” Mendoza said.
Eventually, Rauner agreed to issue the bonds, but no satisfactory reason for the delay was forthcoming.
The second decision that seems to defy sound business practice was the governor’s veto of the Debt Transparency Act. It passed the Illinois House with some bipartisan support – a notable accomplishment in Illinois’ polarized environment.
Again, the bill seems to promote sound business practices.
Under Illinois law, state agencies only have to present bills to the comptroller’s office for payment once a year. And, they don’t have to be submitted until October. Since the state’s fiscal year ends June 30, bills not submitted by October are already 120 days overdue.
“This is a long overdue initiative,” Mendoza said. “This is incredibly important information when managing a checkbook – that’s my job, to manage the state’s finance. It’s impossible to that when I don’t know what the true debt is.”
Mendoza said that practice helped hide the staggering amount of debt Illinois actually faced. She noted, and we agree, that the current law isn’t fair to taxpayers or the state’s creditors.
As previously noted, business and government operate on two different planes. This is one of those times when the planes intersect and solid business practices should be followed. It’s the smart, and right, thing to do.