Taxpayers hit hard by interest on unpaid bills
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.