Illinois comptroller: State finances continue downward spiral
From press release
Illinois Comptroller Dan Hynes said Jan. 6 that as Illinois begins the third quarter of FY2010, it will continue to confront record bill payment delays, debt and the most dangerous fiscal conditions in modern history.
The assessment of the state’s fiscal situation came as Hynes issued his quarterly report.
Hynes said Illinois had $5.1 billion in unpaid bills at the end of December. Add to that $2.25 billion in short-term loans the state must repay soon, and another $1.4 billion in unpaid health care bills that have not yet been sent to the Comptroller’s Office, and the state’s effective bill backlog climbs to more than $8.75 billion.
Hynes urged the governor and the legislature to take immediate and meaningful steps to address the state’s dismal fiscal condition or risk further erosion of Illinois’ social service programs.
“This ongoing fiscal disaster is threatening to permanently harm programs and services serving children, seniors and the disabled, and if that is allowed to happen, this state will have failed our most vulnerable citizens,” Hynes said.
Suppliers of goods and services to the state, including health care providers and other critical social services, are waiting 92 business days to be reimbursed—or more than four-and-a-half months. That delay is almost double the 48 business-day delay at this time last year.
Record payment delays are impacting state programs and services across the board. The backlog includes grants to school districts and pre-school programs totaling $1 billion, university and community college payments in excess of $775 million and local government and transit district payments of more than $478 million.
While the payment delays are expected to improve in January after Illinois receives dollars from a pension bond sale, the impact is expected to be marginal and temporary. The state must begin paying back the $2.25 billion in short-term loans plus interest that comes due beginning in March. Hynes noted that the bond rating agencies have downgraded Illinois’ ranking to among the lowest in the nation, and Illinois cannot further jeopardize its financial status by failing to repay those short-term notes on time.
“Without major changes in the way Illinois collects revenues and how it spends those dollars, the state will enter FY2011 on July 1 with the largest amount of unpaid bills from the prior year in its history,” Hynes said.
The state’s cash flow position already has declined by $4.1 billion over the past year, Hynes said. He identified several factors in the decline of the state’s cash-flow position, including continued weakness in the state’s economy-driven revenues, a structural imbalance in the enacted FY2010 budget, and the failure to address the deficit in the FY2009 budget, resulting in the state using its first $3.9 billion in revenues this fiscal year on last fiscal year’s bills.
Though there is evidence of improved economic conditions nationally, further declines in Illinois’ economy-driven revenue sources this year continue to threaten the state’s financial stability. State corporate income tax receipts were down 16.3 percent, sales tax receipts decreased 12.6 percent and individual income tax receipts fell 7.6 percent, compared to the same period last year.
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