Although Gov. Rod Blagojevich’s arrest initially threw the deal into limbo, state officials came to an agreement last night to move forward with a crucial $1.4 billion borrowing plan. While not a fiscal panacea, the bond obligations will provide Medicaid reimbursements that have been held up for months and will help cover the $4 billion pile of backlogged bills owed to state vendors. Reuters has more:

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.

(H/T Archpundit)