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Today’s number: $86.3 million

Monday, Apr 15, 2013

* From the SJ-R

As taxpayers rush to send in their 1040s Monday, folks sending a check to the Illinois Department of Revenue may be wondering what happens to all that cash.

The answer for at least $86.3 million last year is that it gets “flushed away,” according to state Comptroller Judy Baar Topinka.

The line of unpaid vendors is much longer and the bill is much higher than that comparatively small amount — the total for outstanding bills stood at nearly $5.9 billion as of Friday afternoon — but those tens of millions of dollars last year went to cover interest owed on those late payments.

If the state can’t pay its bills on time — after 90 days — private vendors become eligible for interest on the overdue amount. That accrues month after month until the bill gets paid.

Many of those overdue bills are in the Medicaid program, which means the state isn’t getting timely federal reimbursement, which just compounds the problems.

- Posted by Rich Miller        


24 Comments
  1. - wordslinger - Monday, Apr 15, 13 @ 10:32 am:

    –the total for outstanding bills stood at nearly $5.9 billion as of Friday afternoon–

    Last year year at this time it was over $9 billion, so progress is being made.

    But this still makes no sense.

    –“When a family is drowning in debt and interest payments, the worst thing it can do is apply for new credit cards,” she said. “The additional spending power may bring short-term relief and a false sense of security, but it will ultimately lead to financial collapse.”–

    But when a family can refinance 18% debt for 5% debt, they’d be crazy not, too.

    It’s so simple, I’m sure everyone knows that. But I suspect there are a number of regular heavy-hitter vendors — those without cash-flow issues — who are more than happy to get paid months’ late on a monthly basis and collect the juice.

    Good for those vendors, bad for taxpayers.


  2. - Anon - Monday, Apr 15, 13 @ 10:46 am:

    5.9B? Rich, wasn’t it sitting at almost 9B two years ago? That’s quite an improvement.


  3. - Bill White - Monday, Apr 15, 13 @ 11:10 am:

    We can add “lack of timely federal reimbursement” to the list of reasons why refinancing IL debt with a bill consolidation loan is simple common sense.


  4. - unbiased observer - Monday, Apr 15, 13 @ 11:18 am:

    actually late reimbursement, even with interest is bad for many if not most hospital systems in Illinois. especially in the rural areas, these hospitals run on razor thin margins. if this problem is not addressed there will be many more rural hospitals going out business due to late Medicaid payments. rural hospitals (and urban ones) are major employers in their communities.

    it is ludicrous to downplay this issue, to say it isn’t that important because the payments are coming late with interest. it is a huge deal.

    also don’t forget, the school systems in tax poor school districts are simply not getting paid all of their “promised” state aid. this is projected to get worse. this will cause schools to lay off staff (watch headlines over next few months) and decrease the educational experience of our students.

    this is a major issue and unless something is done it will have terrible effects on our state.


  5. - Bondholder - Monday, Apr 15, 13 @ 11:18 am:

    That $5.9Bn is a fallacy. Something not being included. Was $9Bn at time of most recent Bond sale, less than a month ago. IL uses three different accounting methods among is various offices, and each one reports a different level of unpaid bills. Fascinating, really.


  6. - Captain Illini - Monday, Apr 15, 13 @ 11:24 am:

    Slinger of the Word is right again. For those able to endure the wait, it’s the best investment return anybody is going to get. In fact, it’s geared toward large corporations and other companies that are balanced with non-governmental clients so cash flow can happen. The dirty secret this administration doesn’t want to talk about is the structural problems of spending…since getting a loan to cover the bills, thus saving interest would expose the next unpaid bills run due to the spending issues.


  7. - Raising Kane - Monday, Apr 15, 13 @ 11:27 am:

    “refinancing the debt” as Blago also refered to it, simply takes the pressure off and allows the state to keep on spending. It really is like a home equity loan to pay off credit card debt and then most people charge their cards back up. Illinois has a history of doing that as well. If you borrow and take the pressure off of holding the line on spending you create even more of a long term problem.


  8. - Bill White - Monday, Apr 15, 13 @ 11:34 am:

    @Raising Kane - this piece appears spot on: “Burke versus Buckley”

    === For the Burkeans of 1950s, emphasis on community was at the heart of a properly conceived conservatism. [Russell] Kirk wrote: “True conservatism … rises at the antipodes from individualism. Individualism is social atomism; conservatism is community of spirit.” ===

    and

    === [Russell] Kirk abhorred the libertarian direction in which Buckley and colleagues were taking conservatism. Kirk later denounced libertarianism for revering “self-interest, closely joined to the nexus of cash payment” rather than Burke’s “community of souls.” He complained that libertarians take “the state for the great oppressor” although Burke taught that government “is a contrivance of human wisdom to provide for human wants.” ===

    http://www.theamericanconservative.com/articles/burke-not-buckley/


  9. - Small Town Liberal - Monday, Apr 15, 13 @ 11:34 am:

    - It really is like a home equity loan to pay off credit card debt -

    That would be true if a lot of credit card companies were living hand to mouth like a lot of vendors are. We should get these people paid, forcing them to wait around to keep pressure on the state is asinine.


  10. - Ahoy! - Monday, Apr 15, 13 @ 11:35 am:

    It’s also only half the problem, we only know how much we pay in interest due to late payments, we don’t know how much we owe and how it is compounding the problem. Not sure why Illinois accounting can’t figure this out, just know it’s an issue.


  11. - Raising Kane - Monday, Apr 15, 13 @ 11:47 am:

    STL….Any other ideas of how to keep the pressure on the state? We can not keeep borrowing to pay operating expenses.


  12. - Mouthy - Monday, Apr 15, 13 @ 11:51 am:

    Interest is too high, 6% is fair.
    There may be billions of unpaid bills that have been held from being on the books. You don’t know how much is there because it’s mostly inside baseball kind of stuff. So if you want to gauge whether the state has improved this isn’t the number to do so with.


  13. - Rich Miller - Monday, Apr 15, 13 @ 12:03 pm:

    ===Any other ideas of how to keep the pressure on the state?===

    Yes, the interest and principal payment on all that hard debt. It’ll require a bigger cut of state spending than they’re debating right now.


  14. - wordslinger - Monday, Apr 15, 13 @ 12:05 pm:

    –STL….Any other ideas of how to keep the pressure on the state? We can not keeep borrowing to pay operating expenses.–

    You’re already borrowing from vendors at a higher rate. Some of the Big Boys are happy with the arrangement and the juice. Social service providers, not so much.

    I don’t think paying higher interest rates is a smart way of trying to exert fiscal discipline.


  15. - wordslinger - Monday, Apr 15, 13 @ 12:17 pm:

    ===Any other ideas of how to keep the pressure on the state?===

    –Yes, the interest and principal payment on all that hard debt. It’ll require a bigger cut of state spending than they’re debating right now. –

    Best point, yet. The first time you’re late on a bond payment, the house of cards comes down. That’s why it’s never happened in nearly 200 years.


  16. - Raising Kane - Monday, Apr 15, 13 @ 12:44 pm:

    If you spread that 2B over 30 years, the payment won’t be high enough to keep the pressure up. And wordslinger is right, debt payments are the first checks written every month.


  17. - Rich Miller - Monday, Apr 15, 13 @ 12:46 pm:

    ===If you spread that 2B over 30 years===

    Every proposal I’ve seen is for 10 years or less. Some were quite a bit less.


  18. - Anonymous - Monday, Apr 15, 13 @ 12:50 pm:

    The money they would be borrowing is for spending that has already occurred. It’s dumb not to borrow and pay a much lower interest rate than the state is paying now.


  19. - Demoralized - Monday, Apr 15, 13 @ 12:50 pm:

    Sorry. That was me above.


  20. - wordslinger - Monday, Apr 15, 13 @ 12:56 pm:

    –If you spread that 2B over 30 years,–

    30 years would be crazy. The whiz kids would crunch the numbers to make it come out right, but my guess would be five, ten at the max.


  21. - wordslinger - Monday, Apr 15, 13 @ 1:00 pm:

    Rich pointed out the fiscal discipline bonding enforces, not me.


  22. - Arthur Andersen - Monday, Apr 15, 13 @ 1:48 pm:

    30 year amortization for this type of debt is not only crazy, it might be illegal under Federal law. Five to ten sounds about right.


  23. - zatoichi - Monday, Apr 15, 13 @ 4:50 pm:

    Since previous debt levels were about $8B-$9B does that $5.9B show just what the Comptroller has booked or does it include projections of what the departments have not released yet?


  24. - Just The Way It Is One - Monday, Apr 15, 13 @ 6:16 pm:

    It’s become beyond aggravating to look this ugly eye sore in the face because, especially when some of us just had to cut a check to square up with Uncle Sam after a fun weekend of spare time laboring on all of the bureaucratic tax gobbledygook paperwork, it’s the same old story of just layer upon layer of debt piling up with a lotta good folks and service providers livin’ here in Illinois going UNpaid–with the U.S. Govt. not divvying out the Medicaid funding we are owed so Illinois can better do its’ part on the (apparently) 5.9 Bil. Monster out there (although at least that beast has shrunken some from the recent 9 Bil. Monster roaming Illinois streets…!


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