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National Editorial & Columnists

STATEHOUSE INSIDER: Tax hike money comes in, but bill backlog stays put

State still owes $14.9 billion in unpaid invoices

Doug Finke
Doug Finke

Revenue from the state income tax increase approved by lawmakers in July is coming into the state, but so far it hasn't made much of a dent in the bill backlog.

The Legislature's Commission on Government Forecasting and Accountability said that base revenue for the state's checkbook account increased by more than $800 million in August over the same time last year, the result of higher income taxes approved as part of the budget deal.

The number does not include about $150 million that was borrowed from special state funds, another tool included in the budget deal to help stabilize the state's budget.

But while money from the income tax hike is beginning to flow into state coffers, the bill backlog hasn't dropped. The website for Comptroller Susana Mendoza said Wednesday that the bill backlog stood at $14.9 billion. Although the size of the backlog fluctuates, it is not much different than where it stood when the budget was approved in early July.

"We've been saying for 2 months that the higher income tax receipts would not start getting to our office until September," Mendoza spokesman Abdon Pallasch said. "The new budget should stop [the backlog] growing. The part of the budget aimed at getting it down was the bond authority which the governor just said he would take advantage of."

The budget agreement authorized Gov. Bruce Rauner to OK issuing up to $6 billion in bonds that would then be used to pay down the bill backlog. The state can borrow the money at a lower interest rate than the 12 percent late payment fees that are owed to vendors because the state hasn't paid its bills on time.

Last week, Rauner finally agreed to go ahead with the borrowing. He said he needed to find a way to repay the bonds, something he said was not included in the budget. Democrats who helped draft the budget deal disputed that and said more than $300 million was available to repay the bonds.

In an interview with WBEZ radio last week, Rauner said that "our team has come up with over half a billion dollars in savings and spending reductions that we can implement and we'll use those savings to pay down the principal on the refinancing, the bond borrowing that we're looking at."

Rauner's office did not respond to questions about the source of those savings.

COGFA revenue manager Jim Muschinske agreed it will take time for the full effects of the income tax increase to be felt.

"It's going to take a couple of more months, probably, before everything is really integrated," he said. "There are always some employers who are going to be slow to adjust the withholding tables. We know that from experience."

COGFA's report from August did find an increase of almost $500 million in federal reimbursements for the month. Muschinske said the increase was mostly from Medicaid reimbursements, although he said part of the year-over-year increase was the result of the previous August being so poor for federal money coming in.

Mendoza's office said in July it intended to focus on paying down the Medicaid portion of the bill backlog because that would pry loose additional money from the federal government.

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