Right now, the oldest bills held by the Illinois Comptroller’s office date back to July 1, 2015, when the budget impasse began. Bills being paid on a day-to-day basis still date back to October of 2016. The Comptroller estimates that there are over 188,000 bill requests from state agencies waiting for payment in her office.
Just let that sink in for a bit. The oldest bills date back to 7/1/2015.
…Adding… From the Wall St. Journal…
The state owes Illinois dentists $225 million, and some of those bills go back 23 months, according to the Illinois State Dental Society. Some dentists in college towns or other areas with lots of state workers are selling their receivables to keep their heads above water. Others are asking state employees to pay in cash, says Ronald Lynch, a dentist in Jacksonville.
“There are dentists who have to do this just to survive,” says Dr. Lynch. “It’s very stressful.” Dr. Lynch, who hasn’t asked for such cash payments, says he is owed about $250,000, forcing him to forgo a salary so he can continue to pay bills and his employees.
Health care is the capital’s biggest employer apart from the state itself. Springfield’s two hospital systems — Memorial Health and HSHS St. John’s — say they together are owed more than $200 million by the state. Edgar Curtis, Memorial Health’s chief executive, says he has put off a $100 million capital-expansion project because of the uncertainty. “We hate to see projects being shelved because of what is going on at the state level,” he says.
When payments to vendors are not completed on time, there are financial consequences for the state. The Illinois Prompt Payment Act is a state law that sets mandatory penalty interest payments for most bills over 90-days past due. For most expenses, the interest penalty is 12% per year.
Since the beginning of the year, Illinois has paid $181 million in interest on late payments alone from debts created in previous years. An estimate from the Illinois Comptroller’s office says the state will have accrued $800 million in penalty interest this year that must be made in future fiscal years. The state must pay interest on every bill from the backlog, leaving less revenue left over for other bills in the queue.
That’s $800 million that can’t be spent on social services, schools, universities, public safety, you name it.
* A look at other states…
Habitually paying “late fees” through interest rates is not a practice used in other highly populated U.S. states. Other states have similar “prompt payment” laws that set late payment dates and penalties for debts in those states. These laws generally give states between 25 and 45 days to pay bills, and penalties range from 5% to 10% annually.
However, no current significant bill backlogs have been reported in California, Texas, New York, Florida, or Pennsylvania. While they each have their share of financial challenges, Illinois’ unprecedented lack of a budget has created a concept that simply does not exist in other states: $15 billion in unpaid bills.