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Just two weeks after Illinois Gov. Pat Quinn chopped $1.4 billion from the budget, the cash-strapped state is turning to the debt markets to get it through the fiscal year.

On Wednesday, it plans to raise $900 million through Build America Bonds to fund its first capital program in more than a decade. The money will be used to improve roads, bridges and schools.

And this debt issuance is only the beginning. The state plans to raise $1.3 billion in short-term notes next week and $1.4 billion in debt related to tobacco settlement funds in November.

And, the state plans to turn to the debt markets to fund $3.7 billion in pension obligations in December, if the state legislature approves. The state already sold $2.4 billion in pension notes in January.

States don't traditionally fund their pensions with debt, but the practice frees up other money that can be used for operations, said John Sinsheimer, Illinois' director of capital markets.

Illinois is not alone in turning to the debt markets to get out of a fiscal hole. Many states and municipalities have ramped up their borrowing as tax revenues plummet amid the economic downturn.

But Illinois' actions have not sat well with rating agencies. Both Moody's and Fitch downgraded the state in June, before the $24.9 billion budget was passed. That makes it more expensive and more difficult for the state to raise money in the debt markets.

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Hippie Operative Nikovich Nikita Nicovna Talibani,
signing off