Illinois' backlog of unpaid bills nears $4 billion
SPRINGFIELD _ The state's backlog of unpaid bills has reached a new record of nearly $4 billion, creating a "potentially catastrophic" situation for both state government and private business, the Illinois comptroller warned Thursday.
Comptroller Daniel Hynes said the backlog could top $5 billion by March.
Suppliers could stop delivering food to Illinois prisons or letting state troopers buy gasoline, Hynes said. Businesses waiting for the state to pay its bills could lay off workers or simply go bankrupt.
"To characterize this as an imminent crisis risks understatement," the Chicago Democrat said in a letter to other state leaders.
"While it may have become a habit to dismiss my pronouncements as more of the same gloom and doom, the consequences of inaction are very real and potentially catastrophic," Hynes added.
His warning comes just days after Gov. Rod Blagojevich's administration said state revenues have declined sharply, creating a roughly $800 million gap in the current budget.
Hynes proposed changing the law to make it easier for Illinois government to take out a short-term loan and by setting up a line of credit for the state. Borrowing money would provide cash so the state could pay some of its bills, offering relief to the businesses that now must wait months to get the money owed to them.
That won't solve the state's problems, Hynes said, but it would provide some relief for businesses that are waiting months to be paid for services they've provided.
The Blagojevich administration said the idea is worth discussing.
"We agree that short-term borrowing could be helpful to pay bills quickly during this time of year and manage the state's uneven cash flow," said Blagojevich spokeswoman Katherine Ridgway.
But Sen. Christine Radogno of Lemont, the lead budget negotiator for Senate Republicans, criticized the idea. Short-term borrowing would just make the state's problem worse, she said.
Radogno offered no alternatives for cutting the backlog. She said Blagojevich and his fellow Democrats already have burned through all the temporary measures and one-time revenues that can help a state weather bad times.
"All the little safety valves, all the wiggle room we might have had to tide us over, are gone. There is nothing left," Radogno said.
State government often has let bills pile up during tough economic times. The backlog has grown significantly during the Blagojevich administration.
Much of the backlog is owed to hospitals, nursing homes and pharmacies that provide care to the poor and then submit bills to the state. These providers are waiting months to be paid for their services.
In the past, providers have sometimes taken out loans to help them cover payroll and other expenses while waiting for the state to pay. But the national credit crunch is making it hard for them to borrow now, Hynes said.
The overdue bills also include basic supplies. Hynes said food suppliers to state prisons already have threatened to stop deliveries because of overdue bills and state police officials are worried that troopers won't be allowed to buy gasoline with state charge cards.