Wednesday, January 18, 2012

Comptroller: State's stack of unpaid bills isn't growing smaller

By Jamey Dunn

Even after a tax increase, Illinois has not made much progress on the total of overdue payments it still owes to vendors, medical providers and others.

According to Comptroller Judy Baar Topinka’s quarterly report, the comptroller’s office had almost $4.3 billion in late bills as of December. Topinka said that number, combined with approximately $2 billion in Medicaid bills being held at state agencies and other late payments such as corporate tax refunds, brings the total backlog to about $8.5 billion.

“Even if current revenue projections hold, the backlog at [the comptroller's office] is not expected to change much from last year,” the report said. Topinka said that the bulk of new revenues from the tax increase is not being used to pay down old bills. “It think everybody assumes that if we’re going to have the largest tax increase in the state of Illinois, that this was going to apply to unpaid bills,” Topinka said.

Kelly Kraft, spokesperson for Gov. Pat Quinn’s budget office, said growing demand for programs is sucking up revenues. “It is important to talk about program growth and need. People will see the increase in spending, but it is not because a new program or something of that nature has been created. It is because of growth in demand. For instance Medicaid costs are growing at 6 percent a year. Growth rates like these are unsustainable that is why further reforms are a must.”

Topinka agreed that growing Medicaid spending is a concern. She said that the economic crash has caused more people to be eligible for the program, and so-called baby boomers will likely need more medical care as they age. “You’ve seen the Medicaid rolls blossom,” she said. 

The state has also seen federal funds dip as stimulus dollars have stopped coming in.  According to the report, Illinois has gotten $1.6 billion less  — about a 55 percent drop — in federal funds this fiscal year.

As part of the state budget plan approved in the spring, Illinois is slated to push billions in Medicaid spending into next fiscal year. “The [General Assembly] significantly under-budgeted Medicaid [appropriations] for [Fiscal Year 20]12, so processing has been slowed down so cash is available throughout the [current fiscal year], right through June 30th. If the entire Medicaid [appropriation] is spent by, say, April 1st, then health care providers would not receive any payments until the new [fiscal year] starts,” Kelly Kraft, spokesperson for Gov. Pat Quinn’s budget office, explained in a written statement.

Topinka said she is concerned about the state being able to pay those bills once they are sent to her office. She said that if all of the $2 billion is sent at once, “I don’t know how [we will pay it.]”

Perhaps the one bright spot in the comptroller's report was that Illinois has paid off all of its bills from FY 2011. However, $5.15 billion in FY 2012 revenues was used to pay down the FY 2011 bills. Topinka said this practice of kicking such a large chunk of obligations into the next fiscal year, once seen as a move to be made only during a fiscal emergency, has recently become a standard budgeting tactic. “Now it is perpetual emergency, and literally, the nonpayment of vendors is almost like a line item in the budget,” Topinka said. “We almost work on the basis that the private sector is going to carry the load for the state.”

She said that if a substantial effort is not made to address the backlog, Illinois will likely see a similar stack of unpaid bills next fiscal year. “So here we sit — same time, same channel, different year, but it’s the same problem.”

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