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An uncertain future, to say the least

Friday, Mar 18, 2016

* This AP story is kinda jumbled but I’m gonna try to clear it up for you

Illinois’ chief fiscal officer said Thursday that the state’s pile of overdue bills is even higher than earlier reported and could hit $10 billion by summer.

Comptroller Leslie Munger told a Senate appropriations committee that the $7.6 billion backlog only queues up money that’s still owed because the state is required to pay it by court order.

The Republican says there’s another $1.25 billion not included in the total because that’s money owed to vendors under contract […]

The state has no authority to spend money because Republican Gov. Bruce Rauner and legislative Democrats have bickered for nine months about a fiscal plan.

What Munger was trying to say was that if the Democrats successfully appropriate money for state vendors (including human service providers), the state’s official payment backlog is going to increase by another $1.25 billion.

Why? Because while those services are currently being provided under state contracts, there are no enacted appropriations. All state contracts are subject to appropriations. So, the owed money isn’t officially counted by the comptroller because agencies can’t even submit anything to her without an appropriation or court order - and she couldn’t pay the bills even if she wanted to. But if the Democrats appropriate that money, the backlog will grow because it will then be added to the tab.

* And this brings us to an e-mail I received today from a very worried provider. The sender asked that I keep his name and organization out of it, for good reason…

Mr. Miller,

I would prefer that my name and position not be used in any story. I run a medium-sized Human Service organization in [redacted]. We have services in [redacted] counties. We have a few contracts with the state.

I wanted to explain to you why it is important that the General Assembly pass and the governor sign an appropriation for FY 16 whether there is revenue tied to it or not.

Our contracts all have a clause that states “pending appropriations.” The theory is, if there are no FY 16 appropriations then all of the non-consent decree services that we are performing do not have to be paid. So in essence, we have a contract with the state to perform services. If we hit July 1, 2017 and there is no appropriation bill that covers our services, we very well may have performed these services for free.

But if there is an appropriation, our payments will be treated like any other contract.

I’m telling you this because it is my belief that is the reason the House and Senate Democrats are pushing an appropriation bill.

* The reader is partially right. Without an appropriation (or a successful lawsuit), those providers won’t ever be paid. It’s one reason why the Democrats are attempting to pass an appropriations bill right now.

However, if a deal is reached after the beginning of the new fiscal year, an appropriation for unpaid FY 16 contracts could still be enacted.

* There’s a big “if” here, though. Will the governor’s office and maybe even the Democrats cut a deal which deliberately shorts those FY 16 vendor contract payments to keep the deal’s costs down? They’ve shorted approp lines before, after all.

Nobody can answer that question with any sort of certainty right now.

* And here’s another problem: What if they never reach a “real” budget deal? No appropriation, no money. Ever. Not without a successful lawsuit, anyway. And that’d be tough.

- Posted by Rich Miller        


28 Comments
  1. - Anonymous - Friday, Mar 18, 16 @ 1:26 pm:

    – Without an appropriation (or a successful lawsuit), those providers won’t ever be paid.–

    That’s the governor’s plan. His actions confirm it, his words mean nothing.


  2. - Nothing to do with it - Friday, Mar 18, 16 @ 1:28 pm:

    Where is my state tax refund? Are they keeping it?


  3. - Cubs in '16 - Friday, Mar 18, 16 @ 1:30 pm:

    The price of doing business with Illinois. Kelly Nicholl has her work cut out for her.


  4. - Gordon Willis - Friday, Mar 18, 16 @ 1:32 pm:

    Thus making the state “business friendly” for social service providers.


  5. - StopDiggin - Friday, Mar 18, 16 @ 1:35 pm:

    The proper venue would be in the Court of Claims. You must file before the end of the fiscal year. The AGO signs off on every settlement/ payout. It’s called a lapsed appropriation. Interest may also be available. Stop diggin Bruce!


  6. - thoughts matter - Friday, Mar 18, 16 @ 1:36 pm:

    does this also apply to state employee health insurance and auto insurance claims?


  7. - Abe the Babe - Friday, Mar 18, 16 @ 1:37 pm:

    All so Effingham county can pay construction workers less money…

    You know I never related to those “illinoyed” billboards until the past year…


  8. - Hopin' & Prayin' - Friday, Mar 18, 16 @ 1:42 pm:

    The importance of the bill passed yesterday by the Senate and the earlier version by the House for higher education is it allows community colleges to access working cash. The Governor likes to say it has no revenue to pay for it, and it doesn’t, but because community colleges would finally have an appropriation for FY16 they could access their working cash to help offset the lack of money from the state. Without an appropriation, they cannot use working cash that is available to them.


  9. - @MisterJayEm - Friday, Mar 18, 16 @ 1:44 pm:

    – Without an appropriation (or a successful lawsuit), those providers won’t ever be paid.–

    That’s the governor’s plan. His actions confirm it, his words mean nothing.

    I would welcome an argument explaining why this isn’t so. (Reminder: Wishful thinking is not an argument)

    – MrJM


  10. - Dance Band on the Titanic - Friday, Mar 18, 16 @ 1:50 pm:

    No need to pay the vendors if they close up shop before the appropriation gets enacted.


  11. - SAP - Friday, Mar 18, 16 @ 1:58 pm:

    I am more than a little surprised that there have not been a couple hundred more lawsuits from vendors trying to get paid for services rendered.


  12. - Trolling Troll - Friday, Mar 18, 16 @ 2:01 pm:

    If the government doesn’t have to pay its bills I don’t have to pay mine!! My internet provider can take that overdue bill and sh


  13. - wordslinger - Friday, Mar 18, 16 @ 2:05 pm:

    –The state has no authority to spend money because Republican Gov. Bruce Rauner and legislative Democrats have bickered for nine months about a fiscal plan.–

    That’s simply not true. When have they “bickered” about a “fiscal plan?”

    The governor has been very clear that pre-conditions have to be met before he will talk about a “fiscal plan.”

    That can’t be hard to understand. Why can’t it be reported accurately?


  14. - Northern pike - Friday, Mar 18, 16 @ 2:05 pm:

    - Nothing to do with it - Friday, Mar 18, 16 @ 1:28 pm:

    That reminds me, I still don’t have mine yet! Submitted in January.


  15. - Norseman - Friday, Mar 18, 16 @ 2:08 pm:

    === if the Democrats successfully appropriate money for state vendors (including human service providers), the state’s official payment backlog is going to increase by another $1.25 billion. ===

    I took it that the $1.25 b are bills racked up because the frat boys asked vendors to run a tab so they could keep the state running. A tab folks were led to believe would be paid once an agreement was reached.

    Was she saying this figure includes everything out there that hasn’t been appropriated?

    If so, then this would contradict the Rauner claim that the Dem approp bill would cost $3 b.


  16. - Ghost - Friday, Mar 18, 16 @ 2:08 pm:

    inpaid contract lawsuits can only be brought in the court of claims. the court of
    claims can only use money appropriated for a foscal year to pay a contract claim from that year. Meaning if they arent paid they cant sue… well they can sue, but only in the court of claims who wont be able to pay them either… ao they are out of luck.


  17. - Casual observer - Friday, Mar 18, 16 @ 2:09 pm:

    This can cut both ways. CWLP should start sending out disconnect notices.


  18. - Commonsense in Illinois - Friday, Mar 18, 16 @ 2:11 pm:

    No


  19. - burbanite - Friday, Mar 18, 16 @ 2:12 pm:

    Our new sign for the state line: Welcome to Business Friendly Illinois! (as long as you don’t do business with the State)

    And the Chamber supports this because????


  20. - why why why - Friday, Mar 18, 16 @ 2:13 pm:

    We need a budget. We need to fund social service providers. BUT, how and why are people providing services if there isn’t a budget? If the contracts have a clause that provides payments are subject to appropriation, and you know there isn’t an appropriation, why are you still providing services? The flip side of that, why are agencies still expecting these entities to provide services?


  21. - Commonsense in Illinois - Friday, Mar 18, 16 @ 2:16 pm:

    Sorry, I was responding to the question posed in the afternoon update (great pub, but the way, Rich) which asked if these agencies with contracts would ever be paid. My response is, No.

    In response to another commenter that suggested filing in the Court of Claims, while that’s probably the procedural route to take, we have to remember that the payouts ordered by the Court of Claims is subject to…wait for it…an appropriation.

    No matter what, too may providers out there are just going to be left hung out to dry and rot like soy beans in a forgotten field.


  22. - Past the Rule of 85 - Friday, Mar 18, 16 @ 2:17 pm:

    At what point can the people of Illinois go to court to liberate our state? At what point can officials be removed for Dereliction of Duty, or Malfeasance,or Gross Negligence or Contempt or Arson or whatever?


  23. - Silverback - Friday, Mar 18, 16 @ 2:24 pm:

    Reminds me of a guy named Nero.


  24. - He Makes Ryan Look Like a Saint - Friday, Mar 18, 16 @ 2:30 pm:

    Companies need to start cutting off the state. CWLP, Landlords etc. Is there any legal options on the federal level that can be imposed?


  25. - thechampaignlife - Friday, Mar 18, 16 @ 3:02 pm:

    ===Not without a successful lawsuit, anyway===

    Class action time for all of the State’s unappropriated service providers? That could bring the total to 100% appropriated or court-mandated.


  26. - Rod - Friday, Mar 18, 16 @ 3:07 pm:

    Thank you Rich for posting this, it is important.


  27. - Nothin's easy... - Friday, Mar 18, 16 @ 3:21 pm:

    Most likely, if the state does not enact the termination clause of an “obligated” contract related to no appropriation BEFORE the service is performed, it will be enforceable.


  28. - Last Bull Moose - Friday, Mar 18, 16 @ 4:27 pm:

    Nothin’s easy. That is not how the contract reads.

    Judges will have to rule. But the language does not favor the provider.


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