Gov.'s scandal could intensify state financial troubles

CHICAGO The state's backlog of bills has slowed payment to care providers, hospitals, and threaten to prevent state troopers from getting gas and prisoners from being fed. Now the governor's problems appeared to be intensifying the state's financial problems. Just as Gov. Blagojevich was arrested, the state was preparing to get a financial reprieve. But the governor's legal trouble caused the Standard & Poor's credit rating agency to put Illinois on a credit watch.

"That has enormously negative implications on the state's bond rating which of course will mean it will cost a lot more money to borrow money," said Alexi Giannoulias, Illinois treasurer.

The state's comptroller says a short-term debt offering this week would have helped keep more checks flowing. He says there are $4 billion of unpaid bills and the bills continue to stack up.

"Foster homes. Adult daycare centers. Nursing homes. Pharmacies. Small mom-and-pop pharmacies. All of these businesses rely on state payments," said Dan Hynes, Illinois comptroller.

The debt sale was pulled because the Illinois attorney general could not sign off on a no litigation certificate. It signifies there is no controversy or litigation pending against a state's governor. Instead, on Friday Attorney General Lisa Madigan took unprecedented action requesting the state Supreme Court remove Gov. Blagojevich.

"We want to make sure that the court recognizes as do the people of the state of Illinois the urgency for us to have a governor who can legitimately and effectively exercise the duties of that office," said Madgian.

State representative Jack Franks is frustrated by the delay to payments of veterans' families. He wants to see the state's ability to conduct business restored.

"In these tough economic times, a time when you've lost a family member, I can't imagine that the state would add insult to injury and not give these families what they're entitled to," said Franks.

Representative Franks introduced legislation to try and speed up payments to veterans' families and hopes action to remove the governor will free up payments to those families and others waiting for the state to pay its bills.

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