Ill. Treasurer to lawmakers: Money from investments will decline

By The Associated Press

Belleville News-Democrat

Published Friday, February 8, 2008

SPRINGFIELD, Ill. --A rocky financial picture could dent the amount of cash Illinois makes on its investments this year, the state treasurer warned lawmakers Thursday.

Illinois likely will lose tens of millions of dollars from the more than $400 million the state usually receives in interest from its portfolio of investments, Treasurer Alexi Giannoulias said in a letter to fellow state officials and lawmakers.

By next year, Giannoulias fears the amount of interest produced by the $16 billion state portfolio could drop to under $200 million, leaving lawmakers with a budget crunch.

Giannoulias said the slowdown is due to unstable credit and housing markets and a consumer spending lull.

He said his office will work to enhance the investments but urged lawmakers and Gov. Rod Blagojevich to be responsible financially. Even if investment yields rebound more quickly than expected, it likely won't fully recover for "quite some time," Giannoulias said.

"When you get those dropoffs, obviously it has a negative effect on revenue," Giannoulias said.

Comptroller Dan Hynes warned last month that a backlog of unpaid state bills topped $1.7 billion at the end of December - a record for the midpoint of the budget year. Some lawmakers fear that slowing revenue growth and climbing expenses will force them to deal with another large budget deficit.