Small victories in great wars are worth savoring, but not for long.
Illinois gets so little good financial news that anything that looks positive should be welcomed with open arms.
The question, of course, is how long they should remain open — more on that later.
First, state Comptroller Susana Mendoza
took a victory lap last week after announcing that Illinois’ huge stack of unpaid bills —
$16.7 billion in 2017 — has been reduced to
$3.5 billion, a sum that means “vendors and providers of good and services are getting paid without delay.”
“For the first time in many years, the state of Illinois can pay its bills as they come in. The oldest commercial vouchers owed to most vendors and providers of goods and services in the office right now are dated April 26,” Mendoza’s office stated in an April 28 news release.
Illinois’ financial standing remains dire. But at least those individuals and entities that did business with the state but were put on the back burner when it came to being paid are now being paid.
In making her announcement, Mendoza warned the public not to be misled about the state’s serious financial woes.
She also repeated her advice that Illinois should not spend the expected $7.5 billion in federal bailout money on new programs but use it to meet existing obligations, including paying down debt.
Mendoza is exactly correct on that point. It will be a grave error if Gov. J.B. Pritzker and legislators do not follow her advice.
What are the debts to which Mendoza
refers? There are so many, but here’s one that stands out.
In November 2017, Illinois issued $6 billion in bonds to raise money to pay its bills. The comptroller’s office said “these proceeds helped to cut the state’s unpaid bill backlog by $7.5 billion in only three weeks.”
By paying lower interest rates on the bond proceeds than it was paying on the unpaid
bills, Illinois saved “an estimated $4 billion to $6 billion in interest costs through 2029.” It was a smart move to make in the context of Illinois’ serious fiscal issues.
Borrowing from Peter to pay Paul is good for Paul. But the borrower still has the same debt, one now owed to Peter. So while those owed money by the state are better off, the people of Illinois still owe the money they borrowed to pay those unpaid bills.
But what of the future? The Legislature’s Commission on Government Forecasting & Accountability reports that if the state continues to increase spending at current rates, its unpaid bills will go right back up. The commission forecast $10.6 billion in unpaid bills in Fiscal Year 2023-24.
Illinois’ economy, like those of other states, is bouncing back in the aftermath of the coronavirus lockdowns. The state enjoyed more than $700 million in increased revenue during February and March compared with the same time period the previous year alone.
But revenue increases won’t solve Illinois’ financial problems. Legislators will have to restrain themselves when it comes to new spending, something for which they have shown zero interest in the past.
Mendoza’s report on unpaid bills is welcome news. But Illinois’ financial challenges remain daunting.