The state of Illinois originally began to delay payment for services and goods as a way of dealing with budget shortfalls on a short-term basis. The plan was to use the technique as a stop-gap until the politicians could figure out how to fix the ongoing problems with the budget. The practice has continued to the point where the state now owes billions in past-due bills, and that is harming businesses, charities and schools that rely on the state for income.
Many charity groups and businesses have been forced to lay off employees, take out loans with sometimes crippling interest rates, and cut services to ordinary citizens due to lack of resources. One of the main complaints with the “system” is the allegation of favoritism towards groups and businesses with the right political connections getting paid first, rather than debts being paid in the order received.
Right now, Illinois is sitting more than 166,000 unpaid bills, with still more awaiting approval to be paid. Only after being approved as a legitimate expenditure does a bill go into the state’s twilight zone of non-payment The total on the bills is well past $5 billion dollar, a record amount for any state’s unpaid bills.
Illinois owes service providers and others in Madison and St. Clair counties more than $75 million. These businesses, charities and service providers are essentially providing interest-free loans to the state for the privilege of doing business with Illinois. Specific examples include the East. St. Louis School District [$4.85 million], SIU-Edwardsville [$3 million], Memorial Hospital of Bellleville [$850,000], and Gateway Regional Medical Center [$1 million].
The old saying is that you cannot escape death or taxes, but the State of Illinois is avoiding paying for death with taxes by delaying payment on $2.8 million in burials for indigent citizens.
The results of the payment delays are evident throughout the state. Businesses have had to close because the monies they were legitimately owed by the state were not paid on time, while their own creditors insisted on payment, regardless of problems with the state. In other cases, monetary problems caused by payment delays have resulted in employee layoffs. Also, when expected services are cut back or eliminated entirely because of lack of state funds, citizens of all types suffer. Unfilled positions contribute further to the economic downturn that lies at the heart of Illinois’ budget crisis in the first place.
Governor Quinn proposed borrowing money to allow the state to catch up on its bills. The Illinois legislature shot down that proposal, and it appears that the state will instead continue to lean on those least able to lend for the funds it needs.