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State very close to normal 30-day payment cycle as bill backlog falls to just $3.5 billion

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Illinois

* Comptroller Susana Mendoza press release…

What does it mean that Illinois’ backlog of unpaid bills has fallen from $16.7 billion in 2017 to $3.5 billion this week?

For the first time in many years, the state of Illinois can pay its bills as they come in. The oldest commercial vouchers owed to most vendors and providers of goods and services in the office right now are dated April 26 – Monday.

There remains $3.5 billion in interfund transfers owed to other branches of government, group health insurance bills with limited appropriation authority, and invoices at state agencies that have not yet been forwarded to the Office of Comptroller for payment. Comptroller Mendoza has said that when the backlog gets down to $3 billion in a $42 billion budget, that’s essentially within the 30-day payment cycle common in private industry.

“This is a remarkable day that I have been working toward since I took office in December 2016 amid the budget impasse when the previous administration was paying nursing homes and hospice centers up to a year late and they let the backlog climb to $16.7 billion,” Comptroller Mendoza said.

“Today’s achievement is the result of diligent daily management of the state’s cash flow by my office, supported by state agencies that now provide monthly updates on the number of bills and late payment interest penalties they are holding at their offices.”

The Debt Transparency Act, resulting in monthly Debt Transparency Reports, was a hallmark initiative of Comptroller Mendoza’s in 2017. It has eliminated costly surprises and has allowed for more effective management of the state’s checkbook.

Paying down the backlog has been aided by steady revenue receipts, even during the pandemic. April, when state residents and businesses pay their taxes, is generally the best revenue month for the state. Though the deadline for filing was moved back to May 17 this year, it appears many filers may have stuck with the April 15 deadline.

Comptroller Mendoza cautioned that today’s low bill backlog does not mean the state has overcome its fiscal challenges.

The backlog does not reflect the more than $3.6 billion Illinois borrowed mainly from the Federal Reserve to pay state medical bills during the worst days of the COVID-19 pandemic and return money to Illinois’s economy. She again stressed that American Rescue Plan funds must be used first to pay back that borrowing.

“I’ll say it as often as I need to: Illinois must craft a balanced state budget for fiscal year 2022 without depending on the one-time federal relief money the state received,” she said. “Responsible budget-making directs the fate of the backlog as we continue making headway with our finances and show taxpayers and the credit rating agencies that we’re serious about restoring Illinois’ financial stability.”

The Comptroller’s Office has informed the bond rating agencies of this positive development and assured them it is doing everything possible to manage the current backlog of bills and address Illinois’ finances head on. Comptroller Mendoza has asked the agencies to consider these positive factors and progress made paying down the backlog when evaluating Illinois’ credit worthiness.

posted by Rich Miller
Wednesday, Apr 28, 21 @ 10:38 am

Comments

This is the perfect opportunity for a GOP administration to rack up billions of dollars in unpaid bills because they’re complete failures at governing and are more interested in being the reason why we can’t have nice things than addressing that their party is morally and intellectually bankrupt.

Comment by Candy Dogood Wednesday, Apr 28, 21 @ 10:44 am
What GOP administration? Where? The GOP in Illinois is inept, but they have very little impact on the budget or finances. As Rich Miller pointed out in an excellent article the other day, Illinois really has to focus on controlling spending, as the bill backlog could really escalate by 2024. And there is the huge pension debt as well. Numbers do not discriminate.

Comment by Willowglen Wednesday, Apr 28, 21 @ 10:54 am
“”that’s essentially within the 30-day payment cycle common in private industry.”"

Yes. For some large company CFO’s this would be considered paying our bills too quickly.

Comment by walker Wednesday, Apr 28, 21 @ 10:58 am
Any thoughts on her future? Re-run for Mayor? Wait until 2026 for Gov? This is impressive along with strong union support (ex CTU). The campaign contribution issues are likely behind her. I’m intrigued.

Comment by 1st Ward Wednesday, Apr 28, 21 @ 11:01 am
How much of this is the result of Mendoza’s administrative expertise? I admittedly know nothing about how the Comptroller’s Office works.

Comment by RJRICH17 Wednesday, Apr 28, 21 @ 11:01 am
This is really outstanding news, how far we as a state have come back from…

“I’m frustrated too but taking steps to reform Illinois is more important than a short term budget stalemate”

… to having a budget, paying bills, and trying to help social services recover as well.

Comment by Oswego Willy Wednesday, Apr 28, 21 @ 11:01 am
===For some large company CFO’s this would be considered paying our bills too quickly.===

When InBev bought out AB, they immediately told vendors their payment cycle was being changed from 30 to 120 days.

Comment by Anyone Remember Wednesday, Apr 28, 21 @ 11:03 am
Competency. It is important.

Comment by Ducky LaMoore Wednesday, Apr 28, 21 @ 11:04 am
Is this claiming credit for something the billions $ Federal infusion really solved?

Comment by midway gardens Wednesday, Apr 28, 21 @ 11:05 am
=== Is this claiming credit for something the billions $ Federal infusion really solved?===

If it is… aren’t you glad it’s being used to pay outstanding bills, or are you looking for ways to chide anything good being done, fiscally?

Comment by Oswego Willy Wednesday, Apr 28, 21 @ 11:06 am
Disappointed in Mendoza for not explicitly thanking Rauner for making this achievement possible.

You can’t rebuild if you don’t first destroy.

The man’s noblesse oblige knows no limits.

Comment by Moe Berg Wednesday, Apr 28, 21 @ 11:09 am
At least they’re not the House Republicans taking credit for wins in the ARP that they voted against?

Comment by Chicago Blue Wednesday, Apr 28, 21 @ 11:10 am
My dentist is still waiting to get paid.

Comment by DuPage Wednesday, Apr 28, 21 @ 11:14 am
===My dentist===

Right.

Comment by Rich Miller Wednesday, Apr 28, 21 @ 11:16 am
It’s hard for me to understand how anyone could compare this iteration of Illinois government unfavorably to the iteration that existed under the previous regime.

Comment by AlfondoGonz Wednesday, Apr 28, 21 @ 11:16 am
Gov. Rauner inherited about a $5B backlog. Imagine what shape our state would be in if he hadn’t messed (not the word I’d like to use) things up.

Comment by Steve Rogers Wednesday, Apr 28, 21 @ 11:23 am
Isn’t it ironic (or apropos) that the Comptroller’s Backlog Voucher Report has the same initials as Bruce Vincent Rauner.

Comment by Steve Rogers Wednesday, Apr 28, 21 @ 11:27 am
And yet the BGA’s David Greising was on the radio this morning bemoaning how the bill backlog keeps “growing and growing”.

Of course it’s cyclical, and this latest low is because of a big fed boost, but it’s less than 1/4th what it was

Comment by Shark Sandwich Wednesday, Apr 28, 21 @ 11:28 am
Waiting for the usual debt scolds to offer praise…

This is bad news for people who pretend to care about debt, only when attacking opponents.

Comment by Grandson of Man Wednesday, Apr 28, 21 @ 11:31 am
This sounds like a good time to pass a bill reducing the statutory interest rate to state vendors for overdue bills.

Still bothered how politicos like Jim Edgar could profit from the state bill backlog under Rauner by buying up debt from distressed state vendors.

Comment by hisgirlfriday Wednesday, Apr 28, 21 @ 11:38 am
Adults at the wheel, both here and in Washington.

Comment by Flying Elvis'-Utah Chapter Wednesday, Apr 28, 21 @ 11:46 am
This is an achievement for our State, and Mendoza led the charge to force State agencies to reveal critical numbers for long-term planning, instead of the repeat surprises under Rauner and others for decades. A 30-day payment cycle when it was taking years is a great improvement, plus the decrease in interest on the payments is another positive effect of timely and accurate resource management. But without long-term pension fixes, the rating agencies will not ignore the biggest elephant remaining in the room.

Comment by thisjustinagain Wednesday, Apr 28, 21 @ 11:49 am
=== But without long-term pension fixes===

(Sigh)

Like… example…

Comment by Oswego Willy Wednesday, Apr 28, 21 @ 11:50 am
@Dupage: you are spot on. My child’s doc makes me front the money for covered insurance expenses and when he gets paid by the state, I get reimbursed. And the orthodontist wouldn’t take off her braces unless I paid an amount that we both agreed was supposed to be covered by insurance; thankfully I was eventually reimbursed.

Comment by Illiniwack Wednesday, Apr 28, 21 @ 11:51 am
=== the rating agencies will not ignore===

The rating agencies ignore the Illinois constitution and how Illinois pays bonds constantly.

It’s a racket.

Comment by Oswego Willy Wednesday, Apr 28, 21 @ 11:56 am
===Illinois really has to focus on controlling spending, as the bill backlog could really escalate by 2024. And there is the huge pension debt as well. ===

The pension ramp is a design feature of Illinois’ fiscal conditions. The structural gap between revenues and spending as a result of the pension ramp is again, a design feature.

When you look back to the discussions around the pension ramp and why it was okay to summarily saddle future Illinoisans with government expenses from 80s, 90s, and 2000 they were relying on magic growth. At no point during the discussion of this design did they ever claim that the plan was to avoid making pension payments at that time in order to make budgetary cuts later.

Illinois does not have a spending problem, it as a revenue problem. It has a revenue problem by design because that magic growth didn’t happen. If you want to start talking about cuts, you start getting real specific about what exactly it is you’re proposing gets cut.

We live in a state where if God judged people by collective responsibility we’d all have a real problem explaining what’s going on at DCFS and why we didn’t spend the money or raise the revenues to fix it, but maybe that’s the real problem with the Illinois GOP. Whatever deal they’ve struck with their version of a deity doesn’t include being responsible for having the power to improve the lives of millions but choosing to whine about the modest tax increase required to fix it, or taxing the wealthiest more to fix it.

Leave unto Caesar was pretty clear. You want to start cutting budgets? Well, okay. But first I want you to tell me what an acceptable number of children dying each year because we failed to adequately support the mission of DCFS is.

Once you put a number on that we’ll know you’re honest about the consequences of your suggestions and we’ll all know what you’re dealing with.

Comment by Candy Dogood Wednesday, Apr 28, 21 @ 12:01 pm
This is really good news.

Now use the Stimulus money to pay the rest of the unpaid back bills and the money borrowed from the FEDs.

Do not expand programs, live within existing revenues, and maybe this State will be back in business and with a good credit rating.

Comment by Unconventionalwisdom Wednesday, Apr 28, 21 @ 12:22 pm
- Candy Dogood - Wednesday, Apr 28, 21 @ 12:01 pm:

Comment of the year.

Comment by I'mma stop you there.... Wednesday, Apr 28, 21 @ 12:31 pm
–Candy Dogood - Wednesday, Apr 28, 21 @ 12:01 pm:

Agreed for great comment. At the very least the comment of the week!

Comment by Big Jer Wednesday, Apr 28, 21 @ 12:37 pm
The State doesn’t owe me any Dental reimbursements. Been a long time since that was true. I fear being this caught up will give a Gov Davis the opportunity to resume Rauners intentional degrading of State finances.

Comment by Anotheretiree Wednesday, Apr 28, 21 @ 12:43 pm
Candy wins the Wordslinger award for today, and possibly the year.

Comment by PublicServant Wednesday, Apr 28, 21 @ 12:50 pm
Great points, @Candy DoGood! I would just like to add that preventing child abuse and neglect is more of a widespread responsibility of our entire human services infrastructure. DCFS is more like the emergency room, responding to calls as they come into the hotline. If we want to be serious about preventing child deaths, as well as abuse or neglect, we need to invest in the kinds of services that Bruce Rauner helped to destroy under his “wedge” strategy — housing, domestic violence, addiction treatment, behavioral health care, child care, crisis intervention services, and the like.

Comment by Andrea Durbin Wednesday, Apr 28, 21 @ 1:03 pm
@Illiniwack - count yourself fortunate you have dental insurance in the first place and that your healthcare costs are livable.

Not the case for many in the private sector.

Comment by Cool Papa Bell Wednesday, Apr 28, 21 @ 2:06 pm
This is ridiculous. We need to get Rauner in there to fix this democrat run state mess.:|

Comment by Real Wednesday, Apr 28, 21 @ 2:12 pm
“Today’s achievement is the result of diligent daily management of the state’s cash flow by my office…”

And a $6.5 billion bond issued a couple years ago. Fortunately, the comptroller’s budget voucher report clearly states this so Mendoza doesn’t have to.

Comment by City Zen Wednesday, Apr 28, 21 @ 2:18 pm
No reason to be snappy and coy about this.

The return to a normal payment cycle for the first time in favor is unquestionably a good thing. Good for us.

Comment by Nick Wednesday, Apr 28, 21 @ 2:34 pm
Unfortunately, the portion left unsaid is that there are still bills yet to be paid from over 2 years ago, as was noted at the COGFA group insurance vendor meeting last week. The dirty secret in this is that while bills are being paid in a more timely manner, the interest accrued on them is not. Until that issue ia addressed by CMS and the Comptroller, it is a bit disingenuous to claim a 30 day cycle.

Comment by Former ILSIP Wednesday, Apr 28, 21 @ 3:00 pm
And as to the long-term fix for the pension mess I posted earlier, by that I mean paying what’s due (not the failed attempts to endrun the IL Constitution, or create new tiers of recipients;one is illegal, the other won’t solve the problem). At some point Illinois is going to have to increase taxes on everybody to pay the pensions; there’s no magic money to be had.

Comment by thisjustinagain Wednesday, Apr 28, 21 @ 3:08 pm
“And a $6.5 billion bond issued a couple years ago.”
“left unsaid is that there are still bills yet to be paid from over 2 years ago”
“Now use the Stimulus money to pay the rest of the unpaid back bills”
“But without long-term pension fixes”

Just like Bruce Rauner…these people can’t take a win.

Comment by Anonymous Wednesday, Apr 28, 21 @ 3:20 pm
Sorry, Anonymous @ 3:20pm was me.

Comment by Skeptic Wednesday, Apr 28, 21 @ 3:35 pm
RE: DuPage’s post at 11:14:

Out-of-network dentists have been paid thru December 6, and in-network thru February 21. I believe those delays are the “group health insurance bills with limited appropriation authority” cited in the press release.

Source: https://www2.illinois.gov/cms/benefits/StateEmployee/pages/qchpqcdpclaimpaymentdelay.aspx

Comment by thechampaignlife Wednesday, Apr 28, 21 @ 3:49 pm