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ILLINOIS’
UNPAID BILLS JUMP TO $14.3B
Illinois Policy Institute/Brendan Bakala
New numbers from the Illinois comptroller’s
office show that Illinois’ unpaid bill backlog has climbed to more than
$14 billion. In August 2016, Moody’s Investors Service predicted
Illinois’ bill backlog would reach $14 billion by summer 2017.
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 Illinois’ unpaid bill backlog has increased to $14.3 billion from a previous
balance of $13.3 billion. The Illinois comptroller’s office announced the
staggering $1 billion jump in unpaid bills in a May 17 press release.
In August 2016, analysts from Moody’s Investors Service, a prominent credit
rating agency, predicted Illinois’ stack of unpaid bills would reach $14 billion
by summer 2017.
In March, Moody’s warned that Illinois’ ongoing budget gridlock and failure to
pay its bills could lead to further credit downgrades, which could result in
Illinois becoming the first “junk”-rated state in the nation.
Illinois’ mounting pile of unpaid bills reveals that the state continues to
spend money faster than it takes it in.
Many Springfield politicians think a tax hike would solve this problem. But more
tax revenue would just paper over the state’s spending problem.
“Grand bargain” 2.0 offers no spending reforms
Recent tax hike proposals coming out of Springfield prove lawmakers learned
nothing from the 2011 income tax hikes, which were unaccompanied by real
spending reform.
State Sen. Bill Brady, R-Bloomington, has introduced a new proposal to
supplement the “grand bargain” budget deal. Brady’s plan calls for retaining the
grand bargain tax hikes, which include an income tax increase and an expansion
of the sales tax that would be expected to bring in $5.4 billion and $300
million in tax revenue, respectively, as well as casino expansion fees, which
would bring in an estimated $1 billion.
Brady’s plan may also rely on revenue gathered from the sale of the Thompson
Center, estimated at $200 million.
But more money will not solve Illinois’ structural problems. New revenue will
only delay the needed reforms to deal with Illinois’ massive cost drivers.
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Illinois politicians don’t use tax hikes to pay down unpaid bills
Springfield politicians infamously sold the 2011 income tax hikes
as a way to pay down Illinois’ debts. But despite taking in $32
billion in new tax revenues, lawmakers did not solve the state’s
pension crisis or clear the bill backlog; instead, the new revenue
acted as a stalling mechanism in order for politicians to put off
needed reforms.
Illinoisans are tired of tax hikes. Polling conducted in February
and March by Fabrizio, Lee & Associates and commissioned by the
Illinois Policy Institute shows that a majority of Illinois voters
want the state to balance the budget without tax hikes.
Illinois policymakers should rally around plans that actually reform
the state’s finances without having to go back to taxpayers. Tax
hikes would not only be unfair to residents, but would also be
ineffective at solving Illinois’ budgetary issues.
At some point Illinois’ unpaid bills will have to be refinanced to
save money, but that can’t happen until the state gets its spending
problem under control – otherwise lawmakers will continue recklessly
wasting tax dollars.
The Illinois Policy Institute has provided a reform road map that
balances the budget without tax hikes. The plan provides tax relief
to struggling homeowners through a comprehensive property tax reform
package and makes changes to curb bloated administrative expenses in
higher education and the state’s excessive number of local
government entities.
Most importantly, it addresses Illinois’ pension crisis by
implementing a 401(k)-style retirement plan for government workers
going forward, a solution that’s been under lawmakers’ noses for
nearly 20 years.
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