Fiscal Focus

              The State of Illinois borrows in the finan-cial
market for various purposes. Long-term
bonds are typically issued to finance
the costs of projects with a longer useful
life like road and bridge construction and
repairs, new buildings, and school con-struction.
Short-term certificates may be
issued to help the state with cash flow
needs.
Direct debt of the state is repaid by the
state’s revenues. Under Section 9 of Arti-cle
9 of the State Constitution, direct state
debt can be authorized by the vote of
three-fifths vote of each house of the Gen-eral
Assembly or by the majority of elec-tors
voting in a general election. Issuance
of the state’s bonds has been primarily the
responsibility of the Governor’s Office of
Management and Budget (GOMB). Addi-tionally,
conduit, indirect, and moral obli-gation
debt can be issued by Illinois’ agen-cies
and authorities, and some of these
bonds might have a claim on state rev-enues
while other bonds stand on their
own.
This article provides an overview of the
direct long-term debt of Illinois (i.e., gen-eral
obligation and special obligation
bonds). For additional information on this
type of debt, or other debt issued by state
agencies and authorities, the Office of the
Comptroller’s Bonded Indebtedness and
Long-Term Obligations 2007 Annual
Report was recently published and is
available on the office’s Web site.
Types of Long-Term State Debt
General Obligation Bonds
General obligation (GO) bonds are the
largest of the state’s direct borrowing pro-grams.
Backed by the full faith and credit
of the State of Illinois, the state essentially
pledges to repay these bonds before any
other financial commitments from all
available resources. In practice, the debt
service on the bonds is repaid primarily
from the General Revenue Fund (GRF),
the Road Fund and the School Infrastruc-ture
Fund (SIF).
GO bond proceeds fund a wide range of
projects such as road improvements; uni-versity,
state agency and correctional facil-ities
construction and maintenance; envi-ronmental
and conservation projects; mass
transit and aviation projects; and elemen-tary
and secondary school construction
grants.
At the end of fiscal year 2007, $19.9 bil-lion
in general obligation bonds was out-standing,
including $10 billion of general
obligation pension funding bonds. The
pension funding bonds were issued in June
2003 and greatly increased the amount of
state general obligation debt. (See article
on page 2.) The accompanying graphs on
page 3 include the amount of GO bonds
outstanding at the end of each fiscal year
and the yearly bond sales for the last 10
years.
Cover Story ........................front cover, 3-6
Letter From The Comptroller ................... 2
Pension Obligation Bonds
A Four-Year Review........................ 2, 6, 9
No Major Bond Authorizations -
Infrastructure Needs Grow.............. 7, 12
Bonds Used to Fund Environmental
Protection Programs...............................8
Student Loan Debt Reduced................. 9
State Debt Burdens.............................. 10
Revenue Bonds .................................... 11
January 2008 Tables............................. 13
February 2008 Tables ........................... 14
March 2008 Tables ................................ 15
Did You Know............................back cover
In This Issue:
• APRIL 2008 ISSUE •
Illinois’ Long-Term Debt
A Publication of the Illinois State Comptroller
Fiscal Focus
Cover Story continued, page 3