Capitol Fax.com - Your Illinois News Radar » Question of the day
SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Question of the day

Wednesday, Apr 25, 2018

* Press release…

An innovative proposal from State Senator Heather Steans could help businesses and state government at the same time by paying down Illinois’ backlog of bills more quickly.

Steans’ measure would allow the state treasurer to take over debts more than 90 days old, pay the vendors and clear the bills from the state’s ledgers. The approach would enable Illinois to pay off old debts more quickly, slow the accrual of interest penalties and inject money into local economies where businesses have been harmed by the state’s ongoing budget difficulties.

“This is a winning strategy to make more headway on the bill backlog. Every taxpayer benefits,” said Steans, a Chicago Democrat and a Senate point person on budget matters.

“If the treasurer has funds sitting there unused, why shouldn’t that money logically be available for this need? It won’t solve the entire bill backlog problem, but it will get us to a resolution more quickly.”

The proposal, Senate Bill 2858, would allow the state treasurer to pay bills more than 90 days old if the vouchers in the comptroller’s office exceed funds available by $1 billion. It would save the state additional money by implementing a 0.3 percent monthly late payment interest penalty – rather than the 1 percent under current law – on balances paid off by the treasurer’s office through the Vendor Payment Program.

Last year, Illinois paid more than $1 billion in late interest penalties – an outrageous and inefficient use of taxpayer dollars that could have been directed to other needs, Steans said.

“This legislation will help stop the accrual of interest on late payments and enable us to turn around payments to companies that do business with the state in a more reasonable amount of time,” Steans said.

Senate Bill 2858 passed the Senate today and now advances to the House for further consideration.

* Treasurer’s website

The Treasurer’s Office manages the State Investment Portfolio, with assets of approximately $12-$15 billion, providing the necessary liquidity to meet the state’s daily obligations while investing remaining funds in authorized short/long-term investment opportunities.

* The Question: What do you think of Sen. Steans’ proposal?

- Posted by Rich Miller        

40 Comments
  1. - Retired Educator - Wednesday, Apr 25, 18 @ 2:38 pm:

    Makes sense to pay the old bills with high interest. Does that mean that new bills wait longer? That could bring on other problems.


  2. - Perrid - Wednesday, Apr 25, 18 @ 2:44 pm:

    I like the idea of the State paying interest to the State rather than banks, and the providers would like their payments now rather than later I’m sure. With the (fairly safe) assumption that IL will not be defaulting, there isn’t really a downside. I doubt the Treasurer is going to find better than 12% interest.


  3. - christopher - Wednesday, Apr 25, 18 @ 2:50 pm:

    Senator Steans’ idea does show innovation, and I’m glad that she is “a Senate point person on budget matters.” I’m all for making headway on the backlog and, now that the Senate has passed it, I hope that the IL House will do the same.


  4. - Perrid - Wednesday, Apr 25, 18 @ 2:57 pm:

    My mistake, missed the special interest rate for this plan. 3.6% interest might not be that appealing to the Treasurer.


  5. - phocion - Wednesday, Apr 25, 18 @ 3:09 pm:

    Sounds like they really want to raid the road fund.


  6. - Arthur Andersen - Wednesday, Apr 25, 18 @ 3:13 pm:

    3.6% no risk beats a lot of what the Treasurer has in the portfolio right now.


  7. - ChrisB - Wednesday, Apr 25, 18 @ 3:14 pm:

    Instead of having the Treasurer take over the bills, why aren’t we talking about combining the offices? Just cut out the middleman. Problem solved.

    I was at an event for JBT where she campaigned on just that.


  8. - Bond market guy - Wednesday, Apr 25, 18 @ 3:22 pm:

    On first glance, seems like a smart move. Why pay hefty penalties to vendors if you have excess liquidity sitting in an otherwise unencumbered checking account? The only additional credit risk they appear to take on is their own (General Assembly) appropriation risk.


  9. - Anonymous - Wednesday, Apr 25, 18 @ 3:27 pm:

    Great,so we can add the debt to Treasurer to the pension fund as a “Ehh… We’ll just pay it next year…” list. Personally, I’d rather keep the pressure on and actually pay our debts, even at the higher cost.

    Also, to the point of combining offices, Google “Rita Crundwell”; as luck would have it she was just in the news again today. To anyone that would say that couldn’t happen on the State level, I wonder if anyone in Dixon would have thought the same… /s


  10. - Boone's is Back - Wednesday, Apr 25, 18 @ 3:33 pm:

    I think it’s good and that every bit helps… but I’d sure like to start seeing some serious proposals about getting rid of the underlying debt.


  11. - Captain Ed Smith - Wednesday, Apr 25, 18 @ 3:35 pm:

    I think it is a good idea and would go a step further and give the Comptroller access to surplus balances in our special state funds year around with an option for repayment. The two initiatives would give the state vast liquidity available to pay down these balances.


  12. - Mama - Wednesday, Apr 25, 18 @ 3:37 pm:

    There are remaining funds to invest. Seriously?


  13. - wordslinger - Wednesday, Apr 25, 18 @ 3:51 pm:

    Need to see more than the press release. I take it this is some sort of GRF/dedicated funds transfer-back-and-forth mechanism?


  14. - Interesting - Wednesday, Apr 25, 18 @ 4:12 pm:

    This was an early step in how NYC averted bankruptcy. This will be all well and good until the state actually is unable to repay the loan the Treasurer made and then the Comptroller is no longer to spend money appropriated by the GA because none exists in the Treasury (because it was loaned and not paid back). Will Frerichs support this legislation?


  15. - Liandro - Wednesday, Apr 25, 18 @ 4:15 pm:

    Over a billion in just late payment interest…sickening. So much waste that could have gone to critically needed services.


  16. - Arthur Andersen - Wednesday, Apr 25, 18 @ 4:33 pm:

    Apparently a press release is all we have. I can’t pull up the bill on the GA’s website.


  17. - Arthur Andersen - Wednesday, Apr 25, 18 @ 4:42 pm:

    Strike that. I tried again and got the bill after re-reading the Post and realizing a press release couldn’t pass the Senate, duh. The bill language is very straightforward and won’t tell you much more than the release.

    word is nailing it, though, that the bottom line here is that other state funds could be loaned out to prop up GRF with only the approval of the Treasurer. I think that’s a bad idea and would oppose the bill as written.


  18. - wordslinger - Wednesday, Apr 25, 18 @ 4:49 pm:

    AA, it leaves sole discretion for participating to the Treasurer.

    If I were the Treasurer, I’d have nothing to do with it. Takes the heat off the GA and governor to get their acts together.

    More heat should be on them, not less.


  19. - Oswego Willy - Wednesday, Apr 25, 18 @ 4:58 pm:

    ===If I were the Treasurer, I’d have nothing to do with it. Takes the heat off the GA and governor to get their acts together.===

    Ball Game.

    Good pickup, - Wordslinger -.

    ===other state funds could be loaned out to prop up GRF with only the approval of the Treasurer. I think that’s a bad idea and would oppose the bill as written.===

    Agreed.

    To that, and both the points being made by - AA - and - Wordslinger -,

    Any Treasurer of Illinois wanting to manage the crisis type budgeting Rauner (and arguably Quinn for a time until bills were getting paid) has put Illinois thru purposely (Quinn was inept), the weight of taking on what the GA and Governor won’t, and by discretion, “raiding” monies by the Treasurer’s own juggling… it not the fear of owning that heavy burden, it’s relieving two branches of government of their actual responsibilities.

    Not good as written.

    Not great unintended consequences.


  20. - The Captain - Wednesday, Apr 25, 18 @ 5:00 pm:

    1) this is just interfund borrowing under another name, which may be a workaround to get past the transportation lockbox.

    2) this is a bit of a fund accounting nightmare.

    3) often there are surplus funds for a reason, for example there may be upcoming GO bond payments coming due, the Comptroller & Treasurer’s office will make sure there’s sufficient funds available to make that payment. Additionally other funds will be held in reserve to protect our already low bond rating because the rating agencies want to see contingency funds too.

    Versions of this idea have been around for a while, it wasn’t that long ago someone proposed selling bonds to reduce state debt but instead of sending the bonds to market having the State Treasurer buy the bonds. It didn’t get very far.


  21. - wordslinger - Wednesday, Apr 25, 18 @ 5:13 pm:

    –for example there may be upcoming GO bond payments coming due,–

    Set-aside bond funds are off-limits, according to the bill.

    But it certainly is a kind of running inter-fund borrowing system. I don’t think any governor or GA needs another kick-the-can mechanism.

    Nice try to put it all on the treasurer, though. If I were him, I’d insist that the comptroller and governor have to sign off as well, like with short-term borrowing.


  22. - Arthur Andersen - Wednesday, Apr 25, 18 @ 5:20 pm:

    The Captain, the “lockbox” was a thought of mine as well.

    This bill deserves to die in House Rules.


  23. - Ron - Wednesday, Apr 25, 18 @ 5:33 pm:

    Liandro, what are these critically needed services?

    Sounds like a good idea from the senator. Stop paying usury interest rates.


  24. - Ron - Wednesday, Apr 25, 18 @ 5:34 pm:

    The transportation lockbox is a disaster. Proves why direct democracy is a terrible idea.


  25. - Cheryl44 - Wednesday, Apr 25, 18 @ 5:40 pm:

    Yes. Make it so.


  26. - Here's a hint - Wednesday, Apr 25, 18 @ 5:55 pm:

    This is a little preview of the type of legislation that the state and many municipalities will be cooking up for the next 11 years to stave off the total meltdown.


  27. - Not It - Wednesday, Apr 25, 18 @ 6:12 pm:

    I would rather legislators focus on the underlying problem.


  28. - Plutocrat03 - Wednesday, Apr 25, 18 @ 6:58 pm:

    What could possibly go wrong? Illinois pols have lied and cheated for decades.

    On the other hand this would crash the system faster and more completely. Let’s do it.


  29. - Anonymous - Wednesday, Apr 25, 18 @ 7:15 pm:

    This Comptroller is more worried abput cheap political tricks than being part of the solution. Sorry. This is my take. But she wasnt responsible for our plight, so let the bigshots make the tpugh calls


  30. - Demoralized - Wednesday, Apr 25, 18 @ 7:39 pm:

    Ron

    Aren’t you the guy that wants to use that direct democracy to take pensions away?

    Pick a lane.


  31. - Anonymous - Wednesday, Apr 25, 18 @ 7:44 pm:

    Not as good as Rep. Mary Flowers’proposal to start a state bank and borrow from the FED, but not bad.


  32. - Biker - Wednesday, Apr 25, 18 @ 8:47 pm:

    I would rather see these state treasurer controlled funds pick up student loans for Illinois residents at 3.6% interest. That would create a local economic multiplier.


  33. - Ron - Wednesday, Apr 25, 18 @ 9:15 pm:

    Pensions should never, ever be part of a Constitution. As demonstrated all too well be the state of Illinois.


  34. - Anonymous - Wednesday, Apr 25, 18 @ 10:01 pm:

    Ron, and who helped write the constitution? Mike Madigan.


  35. - Arthur Andersen - Wednesday, Apr 25, 18 @ 10:13 pm:

    Anon 7:15, the Comptroller has nothing to do with this bill or with it if it becomes law. Try to keep up.


  36. - mFtI - Wednesday, Apr 25, 18 @ 11:54 pm:

    ‘WxBNwkrGIfrE


  37. - 44th - Thursday, Apr 26, 18 @ 7:57 am:

    On the face of it, sounds great. Shoot for that matter, why not have the state pension funds buy all the late bills and make the 12%, better to go to retirees than banks. Something tells me this will end badly but at least someone is trying to bring some common sense to this mess so TY Sen Steans. or how about just changing the interest rate to something much lower.


  38. - Ron - Thursday, Apr 26, 18 @ 8:10 am:

    How do the “banks” get this 12% interest? Isn’t it going to vendors?


  39. - rrth - Thursday, Apr 26, 18 @ 8:15 am:

    - Ron 8:10, Vendors can sell their receivables to investors who oftentimes, but not always, are funded by banks. So “banks” is really a sub for investors. Some vendors sit and collect the 1%, others can’t afford to wait for the State to pay so they sell the receivable and an investor sits and collects the 1% a month.


  40. - Ron - Thursday, Apr 26, 18 @ 8:18 am:

    Great that banks are able to help struggling vendors, no?


Sorry, comments for this post are now closed.


* Study: Illinois has 8th most regressive state and local tax system
* Kanye West contributes to Chance-backed mayoral candidate Amara Enyia
* More dissonance on Rauner's right flank
* SUBSCRIBERS ONLY - Fundraiser lists and a supplement to today's edition
* Rauner's minority hiring record checked, and new ads from both candidates on race
* Gov. Ricketts?
* Raoul heads into home stretch with new negative spot
* Question of the day
* Gov. Rauner campaigns with "extreme" Republican in Lake County
* Illinois Credit Unions: Giving Back to the Communities We Serve
* Downstate newspapers appear to be picking the lesser of two evils
* Caption contest!
* *** UPDATED x2 *** Plaintiffs holding press conference today
* Maybe have a long chat with the governor about this?
* Pritzker campaign touts party-building money
* Learn from this, please
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* *** LIVE COVERAGE ***
* Yesterday's stories

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............
<


Loading


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
April 2018
March 2018
February 2018
January 2018
December 2017
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005

Syndication

RSS Feed 2.0
Comments RSS 2.0
WordPress




Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller