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Despite windfall, Illinois still behind on paying bills

Published: Monday, June 10, 2013 1:15 a.m. CDT

CHICAGO (AP) – The outlook for thousands of Illinois service providers became brighter after lawmakers dedicated a $1.2 billion windfall to addressing the state’s chronic unpaid bills problem, but some fear the positive trend could be short-lived.

The windfall has helped lower the state’s debt to social service groups, charities and businesses, but only to $5.8 billion from $8.5 billion in April. Providers still expect a difficult road ahead, with some fearing it may take another windfall next year to keep the state’s debts from growing once again. A solution to Illinois’ budget-cramping pension crisis remains elusive, and longer term, the state’s temporary income tax hike is scheduled to be rolled back.

“For better or for worse we continue to have to manage in a crisis setting,” said Dan Schwick, vice president of Lutheran Social Services of Illinois, one of the state’s largest charitable agencies.

The new state budget the General Assembly is sending to Gov. Pat Quinn avoids cuts to human services and education for the first time in years – a fact that Democratic lawmakers trumpeted in the midst of the state’s financial difficulties. Quinn’s office predicts the backlog of unpaid bills will be at $5.9 billion at the end of the fiscal year next June.

But the state comptroller says she fears lawmakers who approved the $35.4 billion general-funds spending plan are counting on another unexpected windfall that will not appear.

“I hate to be the skunk at the picnic, but I must be,” Judy Baar Topinka, a Riverside Republican, told The Associated Press. “If the Legislature thinks there’s money hanging around that they can play with, that is not happening. I was surprised they tagged another billion or two onto the budget, as if happy times were here again.”

For several years, Illinois has made a habit of not paying billions of dollars in bills for months at a time, creating a cycle of hardship and sacrifice for those who deliver some of the state’s most important services. The delays became a regular part of the state’s budget management, forcing businesses and charity groups to borrow money, cut jobs and services and take on personal debt.

The unanticipated $1.2 billion increase in tax revenue, dubbed the “April surprise” in Springfield, came from taxpayers selling assets at the end of 2012 before new tax laws took effect. The remainder of the backlog decrease was due to fluctuations throughout the year as some bills are paid and others accumulate, said Brad Hahn, Topinka’s spokesman.

The comptroller’s office addresses the unpaid bills in the order in which they were received. It has the ability, however, to expedite payments to certain agencies under a hardship appeals process.

After the “April surprise,” Topinka’s office prioritized payments to nonprofits, particularly agencies that serve the elderly or the disabled. It also prioritized agencies that receive Medicaid dollars, in order to take advantage of federal matching funds.

But according to Judith Gethner, executive director of the Illinois Partners for Human Services, an umbrella organization for service providers around the state, some agencies haven’t seen a check yet. For some, outstanding payments from the state still go back as far as a year.

Schwick said Lutheran Social Services got about $4 million from the state last month, but it is still owed $8 million. The agency funds everything from foster care to head start programs to drug treatment and elder care.

The lack of state payments has forced the agency to turn away people seeking treatment for drug abuse. It’s also led to layoffs, delayed building repairs, and ended matches to employees’ 401(k) contributions.

“Tens of thousands of dollars come at a time,” Schwick said. “But it’s never anything close to getting the state current with us.”

Democratic lawmakers disagree with Topinka’s assertion that they are overly optimistic about revenues for the 2014 budget, and therefore where the backlog will end up a year from now.

“We took care of so many of these bills (this year) that it decreased the amount in 2014,” state Sen. Dan Kotowski, a Park Ridge Democrat who helped negotiate the new budget.

But beyond that, lawmakers negotiating the next budget, to be implemented July 1, 2014, must account for the roll-back of the state’s three-year temporary income tax increase, unless they vote to make it permanent. The tax increase, in place since 2011, brings in $6 billion a year.

“Will they make that increase permanent or not?” Gethner asked. “Those are the uncertainties we’re keeping our eyes on.”

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