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* The Southern Illinoisan…
“The Secretary of State’s local Department of Motor Vehicles is open. You can go get your driver’s license renewed. … The lights are still on at most every state facility. That’s true, but this invisible ratcheting up of debts and the backlog of bills continues, pretty much out of sight, out of mind,” [Jak Tichenor, interim director at the Paul Simon Public Policy Institute] said.
The state racks up $2 million in late-payment penalties each day it goes without a budget, Mendoza said in February. Illinois currently owes $14.5 billion in unpaid bills.
The bulk of the state’s financial obligations are being spent “on auto-pilot” by court orders and administrative arrangements, Tichenor noted. But the state is operating on the FY 2015 income tax rate, which decreased to 3.75 percent after a temporary tax hike expired.
“So we’re spending roughly as much as $39 to $40 billion a year, while we’re only taking in around $32,” he said. “… It’s like you’re trying to pay your rent with your credit card. There’s only so long you can do that.”
The last time the state had a somewhat real budget, in Fiscal Year 2015, the state spent a grand total of $35.358 billion.
The Senate’s budget plan cut about $3 billion from state spending. Without a real budget, spending will continue to rise uncontrollably. The governor continues to sign contracts for services and goods without appropriations, while other spending rises “naturally” and can’t be pulled back in.
* More…
Group Health accounts for roughly 32 percent of all outstanding bills—a significant issue because state lawmakers have not allocated any money to these liabilities for the past two years, and as a result these bills (as well as the interest penalties) continue to pile up. And remember the interest penalties don’t stop racking up until the bill is actually paid. Backlogged Group Health liabilities have skyrocketed from $3.1 billion in April 2016 to $4.6 billion in April 2017, and there’s no end to their growth in sight. Some bills are being paid 734 days (or 2 years) late, and that number is only going up.
The Comptroller’s office has estimated that if the state was able to pay its entire bill backlog right now (which it can’t) it would have to also pay $800 million in interest penalties. Compare that to the total amount of interest penalties the state paid between 2003 and 2015: approximately $1 billion. But the state isn’t going to be able to pay all of its bills at once, and the impasse has yet to be resolved, meaning the backlog of bills and penalty payments are both likely to increase further.
This means that whenever lawmakers do decide to end the impasse, the scope of the problem is going to be much larger than it was in 2015. And in the time between, with our non-budget budgets, we’ll have put ourselves in an even worse position to start paying them off.
posted by Rich Miller
Tuesday, Jun 6, 17 @ 9:55 am
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== The governor continues to sign contracts for services and goods without appropriations … ==
I still want to know what legal authority the Governor and CMS are using to sign those contracts.
Adding, if I was a State vendor, I would not accept any contract that contained the non-appropriation boilerplate language.
Comment by RNUG Tuesday, Jun 6, 17 @ 10:16 am
According to Rauner, Illinois is on a “good path”.
So I’m not sure what the concern is. Rauner obviously knows what he’s doing.
Comment by Mr. K. Tuesday, Jun 6, 17 @ 10:16 am
I wish vendors, utilities, etc would just stop accommodating the State.
Shut it down. Turn off the lights.
Maybe then it would be real to the public.
Talk about government waste, $800 million qualifies.
Comment by Sir Reel Tuesday, Jun 6, 17 @ 10:26 am
Being rich does not equal being smart.
Comment by Anonymous Tuesday, Jun 6, 17 @ 10:27 am
Auto pilot isn’t very useful when the plane is aimed at a cliff face.
Comment by SAP Tuesday, Jun 6, 17 @ 10:30 am
===“So we’re spending roughly as much as $39 to $40 billion a year, while we’re only taking in around $32===
This is what happens when we don’t have a governor. Seriously, would things be worse if the office was vacant? If he isn’t going to use it, why did Rauner spend so much money to buy the office?
Comment by 47th Ward Tuesday, Jun 6, 17 @ 10:39 am
“Talk about government waste, $800 million qualifies.”-which I totally agree with, but what is the interest payment on the pension debt each year? Last I heard it was $9.1 billion or 1/4 of the annual state budget.
Comment by Arock Tuesday, Jun 6, 17 @ 10:40 am
What is the citizens recourse in these situations?
Comment by Team Warwick Tuesday, Jun 6, 17 @ 10:43 am
=What is the citizens recourse in these situations?=
Support a third/fourth party.
Old 2-party status quo = Rack up huge debt over a long period of time.
New 2-party status quo = Rack up huge debt in an amazingly short period of time.
Comment by Deadbeat Conservative Tuesday, Jun 6, 17 @ 10:51 am
Your only recourse is to vote the SOB’s out.
Comment by RNUG Tuesday, Jun 6, 17 @ 11:03 am
The problem is that most of the public thinks Rauner is saving money by shutting down SS agencies and stiffing vendors.
The paradigm of “The worst thing you can do about debt is to ignore it” is turned on its head.
He’s “winning” the public and willfully ignorant with his schtick.
Example is Arock @ 10:40 where the consequence of ignoring debt
is blamed on the creditors.
Comment by Deadbeat Conservative Tuesday, Jun 6, 17 @ 11:03 am
== Last I heard it was $9.1 billion or 1/4 of the annual state budget. ==
That is the total payment, including normal cost, principal, and interest.
Realistically, the actual interest (which is to make up for what WOULD have been private interest / earnings IF the money have been paid so it could be invested) is about $5.5-6B.
Comment by RNUG Tuesday, Jun 6, 17 @ 11:06 am
$2 million a day on juice. On purpose.
Malice or stupidity? Those are the only choices.
Comment by wordslinger Tuesday, Jun 6, 17 @ 11:20 am
short term pain = $2,000,000 per day in interest
long term gain = NO calculated return, NONE, NADA, ZILCH
Comment by don the legend Tuesday, Jun 6, 17 @ 11:36 am
“The impasse is the most intentionally vicious act ever committed by this state government on its own people. Period.”
The referenced statement should be a sticky link to the article at the top of the blog until the impasse is resolved.
Comment by Markus Tuesday, Jun 6, 17 @ 11:48 am
The judge who ruled that state spending should occur without a budget should either step down or reverse himself. He has done irreparable damage to the state by facilitating the Rauner strategy to fully bankrupt Illinois institutions.
Comment by Winnin' Tuesday, Jun 6, 17 @ 12:31 pm
At the end of FY 2006, Illinois had the worst unfunded pension liability in the nation,
totaling a projected $42.2 billion.
For FY 2007, the interest payment on the unfunded liability is an estimated $3.4 billion. This means the state must make this $3.4 billion interest payment plus make the “normal cost” payment just to keep the unfunded liability from growing.
Currently that pension debt is three times as much so the interest payment would be close to three times as much as well so the $9.1 billion would probably be a more accurate figure.
Comment by Arock Tuesday, Jun 6, 17 @ 1:14 pm
Arock:
RNUG knows of what he speaks. Leave it to the pension expert.
Comment by Demoralized Tuesday, Jun 6, 17 @ 1:21 pm
== RNUG knows of what he speaks. Leave it to the pension expert. ==
Actually, I could be off some because I didn’t go look the actual FY16 numbers up. But the “normal” payment this year is a bit under $1.9B. $9.1B - 1.9B = $7.2B for both principal and “interest”. Carve that $7.2B whatever way you want.
Comment by RNUG Tuesday, Jun 6, 17 @ 2:33 pm
Are you sure that all non-payments qualify under the prompt payment act? For the PPA to be triggered, there has to be an appropriation.
Comment by Portman24 Tuesday, Jun 6, 17 @ 3:46 pm
When Rauner realized he could not wrestle control of the state from Madigan( I don’t actually know when this happened), I truely believe the game plan changed to drive this state to bankruptcy. Two more years of this spending and lack of revenue and I really think becomes insurmountable.
Comment by blue dog dem Tuesday, Jun 6, 17 @ 4:06 pm
The “real” harm hasn’t yet begun, but it is coming. So far, human services providers have prevented any “real” people from being hurt by the impasse. In the Community Care Program, out of our own decency, and, coincidentally, by demand of the Department on Aging, our clients are still getting services and while we aren’t growing, we aren’t laying of our staff. It’s just the unreal people like me who are preventing our clients and staff from getting hurt in this impasse by going without paychecks. I have about two months worth of savings left before I am done floating Illinois’s budget impasse and then the “real” people will start to get hurt and at that point, it will be too late to save them because I and others will have used all of our savings and credit floating their ridiculous budget impasse. If they don’t want that result, they’d better come up with a plan soon. There aren’t enough nursing home beds for all of these people and when we start falling, it will be like dominos.
Comment by CCP Hostage Tuesday, Jun 6, 17 @ 4:30 pm
Wait till you see the exodus from this state, when the bill in the form of higher taxes, to pay for this mess comes due!
Comment by Anonymous Tuesday, Jun 6, 17 @ 4:36 pm
- Portman24, if its dated and entered and it is a deal that does, yes it does, appropriated or not.
However, keep in mind vendors sell these,, are allowed to in 90 days, which is 3 time longer than similar programs in other states.
And it is taking 6 months, so vendor sells product, files to sell it at 90 days get’s 90% in 6 months, not 90 days at all, not even close to that..at which point the vendor is upside down, they then get 7% more when the state pays the bill to the 3rd party- in some time undefined and the 3% balance after the state has paid the 3rd party it’s interest, Which they are not at all. So the 3rd parties are soaking up 3 months extra of interest or most of it, vendors are not getting it, banks are that are carrying some vendors for some bills, while the vendors are loosing it and cost of aging.
I would pretty pretty confident after July 1st those 3rd parties are not buying any receivables as their investors are not going to as the credit down grades are horrific & due to no end in sight from the monkey legislators lack of action.
So all the vendors-
CCP Hostage -
will slowly bleed to death in massive interest costs of carrying the state, and cease doing business..
Which means things won’t work,, like telephones,, and malware protection, and back up files, and water bills, and things that control doors and lights in the jails, and milk deliveries to kids, and on and on.
And the legislators are on vacation. I guess. I think. Who knows where they are or why they are legislators as they are not mostly.
Comment by sharkette Tuesday, Jun 6, 17 @ 5:34 pm