Illinois is notorious for ignoring its financial obligations and racking up billions in unpaid bills. When it sits on those unpaid bills long enough, the state has to pay a penalty.
Illinois is required by law to pay interest of 1 percent a month on its unpaid bills, also called invoices, when they become more than 90 days old.
According to the state comptroller’s most recent numbers, Illinois paid $186 million in interest payments on its unpaid bills in fiscal year 2013.
That’s 215 times higher than the state’s interest payments of $866,000 in fiscal year 2003.
A recent one-time bump in revenue allowed Illinois to pay down a chunk of its bill backlog: The state collected $1.3 billion more in tax revenue than expected this spring.
But the unexpected revenues weren’t due to a booming economy; rather, the one-time revenue bump was a result of businesses and individuals avoiding higher federal taxes by selling assets and taking early dividends.
This extra cash dropped the ending fiscal year 2013 backlog to $6.1 billion, compared to $7.5 billion at the end of last year.
But Illinois Comptroller Judy Baar Topinka announced on July 1 that Illinois’ unpaid bills will grow by $1 billion in the coming weeks.
That backlog is expected to grow to approximately $7.5 billion by August, $8.1 billion in September, $8.7 billion in October, and about $9 billion in November and December.
That’s a trend taxpayers simply cannot afford. What’s more, it’s a tab they shouldn’t have to pick up in the first place.
If lawmakers would embrace the basics of good public policy – balancing the budget and reining in spending – the state wouldn’t have to force taxpayers to prop up the ballooning costs of fiscal irresponsibility.
Note to readers – Ben VanMetre is senior budget and tax policy analyst for the Chicago-based Illinois Policy Institute.