Illinois' financial condition remains desperate, and there's not much relief in sight.

Illinois hasn't gone belly up yet. That's pretty much the bottom-line conclusion in a recent report on state finances filed by new Comptroller Judy Baar Topinka. She reports some good news, but not much, and concludes that Illinois continues to founder in a sea of debt and financial despair.

"Actions taken in the first three quarters of fiscal year 2011 have allowed the State of Illinois to gain revenue and avoid financial catastrophe in the short-term, but a massive bill backlog and substantial long-term challenges remain as it enters the final quarter (of the fiscal year that expires June 30)," Topinka states in the Comptroller's Quarterly.

Two of the positive financial maneuvers Topinka cited are gimmicks born of desperation the tax amnesty plan and the sale of the state tobacco revenue bonds that created one-time cash infusions into the state's general fund.

Meanwhile, state officials are relying on the expected gusher of new revenue generated by the January 66.7 percent personal income tax increase and 48 percent state corporate income tax increase to help the state climb further out of the hole.

But big problems remain. As has been reported, the money generated by the income tax increases won't be nearly enough to balance the budget and pay the state's old bills.

Topinka reported that Illinois had $4.515 billion in unpaid bills at the end of March 2011, compared to $4.496 billion in unpaid bills in March 2010.

Gov. Quinn has proposed more borrowing to pay off the unpaid bills, but legislators so far have been lukewarm to the idea. Perhaps that's because the state already faces crushing debt from its previous borrowing.

Topinka said one upcoming challenge Illinois faces is the necessity of "having to pay back $1.3 billion from the July 2010 short-term borrowing over the next three months."

Indeed, until an economic recovery comes and/or state officials get serious about reining in excess spending, Illinois appears destined to continue in a state of permanent debt that will cripple its budget planning.

The state's fiscal year ends on June 30, but Topinka reported that last year "Illinois was unable to pay off all of fiscal year 2010's liabilities until Dec. 31 (2010), and could face similar challenges this year."

What she suggests is that unpaid bills will keep spilling over into new budget years, undermining the state's abilities to fund vital services and spreading chaos throughout state government.

This is the inevitable price Illinois is paying for the eight-year spending orgy that began when former Gov. Rod Blagojevich was sworn into office and given free rein by the Legislature. His successor, Pat Quinn, has done little better in addressing spending issues, focusing most of his attention on raising taxes and borrowing money to keep the ship of state afloat.

Tired of Quinn's dithering, Democratic legislative leaders are finally taking serious steps to try to stabilize the budget picture. But Topinka's report shows that circumstances continue to be dire, and absent a strong economic recovery, there will be more financial misery ahead.