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Deadbeat Illinois

When the week ended, the State of Illinois had a backlog of bills totaling $12.2 billion dollars. That amount represents a backlog in vouchers of 140,000.[1]

The bill backlog problem is not new.  Going back more than six years, the state had a backlog of nearly $7.9 billion at the end of 2010. In the following four years, there were fluctuations in the amount as the state worked to whittle down its bills.

However, as the chart below from Illinois Comptroller Susana Mendoza’s office shows, it has been a steady uphill climb since the budget impasse began (July 2015).

historic trend bill backlog

Just who is waiting for payment by the state?  On the same day that the Governor presented his proposed budget to the legislature, his Office of Management and Budget (GOMB) also put out an update on outstanding bills[2].  Using its own data and that from the Comptroller, the composition of outstanding bills was as follows at the end of January (when the bill backlog was just $10.9 billion):

outstanding bills

As noted by GOMB, the totals “do not include all bills received by state agencies that have not been processed by the Comptroller due to lack of FY16 and FY17 appropriations”. In a number of cases, particularly regarding human services, the state signed contracts with providers for services during the fiscal year even though there was not an appropriation for the full year.

Each outstanding bill also accrues interest the longer it waits to be paid. For self-insured providers of the State Employees Group Insurance Program, the interest is 9% annually after 30 days of non-payment. Most other bills accrue interest at a rate of 12% annually after 90 days of non-payment[3]. Comptroller Mendoza has noted that if the state budget situation does not change by the end of the fiscal year, the state could owe up to $700 million interest on a bill backlog that would approach $15 billion[4]. One proposal in the legislature is to borrow money to pay a portion of the bills and incur a lower interest rate.

What Illinois needs is a balanced budget with sufficient revenue that allows it to provide the necessary services to its citizens and pay its bills.

 

[1] http://ledger.illinoiscomptroller.gov/fiscal-condition/#general-funds

[2] https://www.illinois.gov/gov/budget/Documents/Bill_Backlog_Presentation_for_January_FY17.pdf

[3] http://cgfa.ilga.gov/Upload/3YearBudgetForecastFY2017-FY2019.pdf

[4] http://thesouthern.com/news/local/govt-and-politics/interest-payments-add-to-illinois-budget-stalemate/article_9ea46b58-d9de-574a-83e8-652520d8a3c6.html

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