December 16, 2008 / 1:17 AM / 11 years ago

UPDATE 1-Deal reached for Illinois to sell $1.4 bln notes

(Adds details, background)

CHICAGO, Dec 15 (Reuters) - Illinois will go ahead with a much-needed $1.4 billion borrowing on Tuesday after a deal was reached with state constitutional officers on legal language issues related to fraud and bribery charges against the governor, officials said late on Monday.

“We are pleased to be moving forward with the short-term borrowing so that we can pay bills to organizations who are in urgent need of payment,” said Katie Ridgway, a spokeswoman for Gov. Rod Blagojevich in an e-mail.

“The comptroller, treasurer and attorney general joined our office in completing this transaction,” she added.

The federal charges filed against Blagojevich last week, accusing him of trying to sell political favors for campaign contributions and jobs, forced the debt sale to be postponed from Thursday to Tuesday. Madigan raised questions about certifying the debt sale while the governor’s legal problems hung over the state.

Natalie Bauer, a spokeswoman for Illinois Attorney General Lisa Madigan, said the new language was found to be acceptable by bond attorneys working on the deal, clearing the way for Madigan to certify the deal.

That language cites the charges as well as Madigan’s petition to the state supreme court to temporarily remove the governor from office, as well as the Illinois House launching an impeachment inquiry, according a document provided by Madigan’s office.

State Treasurer Alexi Giannoulias believes the borrowing was essential as his office was receiving calls from state creditors that had not been paid since May or June, according to Sara Wojcicki, his spokeswoman.

State Comptroller Dan Hynes reported last month the state was facing a record nearly $4.5 billion unpaid bill backlog that could lead to food cutoffs at state prisons, nursing home closures and other dire consequences. (Reporting by Karen Pierog; editing by Carol Bishopric)

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