Comptroller's quarterly report

State finances grim, and getting worse

"Illinois has too many bills, not enough money to pay them
as revenue dips."

[October 07, 2009]  Assessing the state of Illinois' fiscal situation in his quarterly report, Comptroller Dan Hynes called the situation grim, and getting worse.

"What is clear is that as bad as our budget situation has been recently, it is only getting worse," Hynes said. "We cannot pay our bills, and there is less money coming in than anticipated. The state of Illinois continues to be in a major fiscal crisis, and the situation continues to deteriorate."

Hynes said Illinois had nearly $3 billion in unpaid bills at the end of September, a record development for the first quarter of any previous fiscal year. This, despite the state having borrowed $2.25 billion in short-term loans -- $1 billion in May and another $1.25 billion in August -- which must be repaid before the end of fiscal 2010, on June 30, 2010.

Suppliers of goods and services to the state, including health care providers and other critical social services, are waiting 61 business days to be reimbursed, or about three months -- another record for so early in the fiscal year. At this time last year, payment delays averaged two months, or 42 business days.

"This is a crisis unmatched historically, and the downward spiral is accelerating," Hynes said. "By any quantifiable measure -- the bills outstanding, the payment delays and overall borrowing -- the fiscal situation has never been worse, especially so early in the fiscal year, and there's no end in sight."

Hynes said the backlog is much more than an accounting problem.

"Real people are bearing the brunt of the state's failure to meet its basic obligations," Hynes said. "Calls to the comptroller's payment inquiry center have jumped from more than 1,900 per week to 2,600 per week, and the anger of callers has turned to real fear."

Here are some examples:

• A Chicago Meals on Wheels and nutrition center can't purchase food and is facing eviction.

• A large Lake County program for the disabled can't make insurance or mortgage payments.

• A West Side family services center has exhausted its lines of credit.

• A North Side women's advocacy center director is using her own money to keep operating.

• A downstate independent living center is laying off staff and canceling programs.

• A home health care association serving the elderly can't make payroll for its already minimum-wage employees, who in turn can't pay their rent or mortgage payments.

Hynes identified two factors that have had a major impact on the deteriorating fiscal position: the steep decline in economy-driven revenues, such as personal and corporate income taxes and sales taxes, and record lapse-period spending. Corporate income tax receipts were down 27.8 percent, sales tax receipts decreased 13.2 percent, and individual income tax receipts fell 11.7 percent in the first quarter. Meanwhile the state paid a record $3.8 billion in obligations carried over from fiscal 2009.

"On the one hand, revenues are way down, as is typical in a recession," Hynes said. "That situation is exacerbated, however, by the fact that we are still paying last year's bills. This is a reckoning brought on by years and years of irresponsible budget practices, and nothing has changed."

Hynes predicted fiscal pressures would continue well into fiscal 2011 and warned of record and prolonged payment delays for most categories of state programs and operations, including health care and social services, grants to primary and secondary schools, payments to universities and community colleges, and payments to local governments and public transit systems.

The October 2009 edition of the Comptroller's Quarterly is available by clicking here.

[Text from Illinois state comptroller's office]