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SPRINGFIELD — A proposal in the state legislature to borrow $4 billion to pay down the state’s backlog of bills could mean a double-whammy for Illinoisans who ponied up to pay off old bills as part of a 67-percent “temporary” personal income-tax hike.

By Jayette Bolinski

SPRINGFIELD — A proposal in the state legislature to borrow $4 billion to pay down the state’s backlog of bills could mean a double-whammy for Illinoisans who ponied up to pay off old bills as part of a 67-percent “temporary” personal income-tax hike.

The problem is that none of that tax money has gone to pay down the backlog, which now stands at a half-billion dollars more than it was two years ago.

It’s a structural issue, said state Treasurer Judy Baar Topinka.

“This is not hard to understand. If you keep doing the same thing over and over and over again, you get the same result,” she said.

“If you borrow $4 billion, you’ll pay off the backlog now, but then that cycle will start all over again, and you’ll have another backlog because the structure stays the same, and at the same time now we’ll have a $4 billion bond debt that’s been added on to what we have already.”

In January 2011, Illinois lawmakers promised to use part of a 67-percent  personal income tax hike to pay down old bills — bills that amounted to $8.5 billion. Today, as they consider borrowing $4 billion — again to pay down old bills — the backlog stands at more than $9 billion.

As of Wednesday, there were 196,141 unpaid bills at the comptroller’s office, amounting to $6.9 billion. Add to that the bills that haven’t been sent to the comptroller yet, including $1 billion in Medicaid payments and $1.4 billion in employee health insurance payments.

So where did the tax money meant for old bills go? To pensions and Medicaid, experts say. That, coupled with a spending problem, is why the state is coming around again, looking for money to pay unpaid bills, said Ted Dabrowski, vice president of policy at the Illinois Policy Institute, a right-leaning think tank.

“That promise is broken. All it did was fill the coffers. It allowed the state to pay down the pensions. And that increased tax load helped them avoid reforms on pensions and allowed them just to keep spending more money,” he said.

Topinka agrees. Lawmakers may be trying to do the right thing, but borrowing to pay down the old bills is “a short-term, feel-good ‘aah’ that ends up an ‘ugh,’ she said.

“What happened to the magic tax increase that came out last session that was supposed to pay for the unpaid bills? That went totally to Medicaid and totally to pensions, and we did not get Dollar One to pay for unpaid bills,” she said. “So now they’ve still got the unpaid bills to pay and they want to borrow $4 billion.”

The borrowing proposal, House Bill 6240, has 17 co-sponsors, all Democrats. But bill sponsor Rep. Esther Golar, D-Chicago, facing opposition to the plan, asked for more time before a committee vote. The Legislature returns Jan. 3 for its final “lame-duck” session, and it could come up then, but its future is uncertain.

Phone calls and an email to Golar’s office this week were not returned.

Ultimately, more borrowing is out of the question, Topinka said, and that means vendors will have to continue to wait, at least until the economy improves and revenue picks up.

“The state really cannot afford to do this because we might be able to pay them this time around, but if they are doing work with the state the next time around, we will be in the same hole, if not worse, because now we will have the interest payment on a greater debt load we have to pay,” she said. “So it doesn’t solve the problem.”

Until the state changes its ways, its debt will continue to mount, vendors doing business with Illinois will have to wait months to be paid, and taxpayers will be on the hook for even more, the experts say.

Topinka said she believes the economy is improving and, given time, will enable the state to pay down the backlog in a more reasonable manner.

Most vendors, she added, probably would tell her to borrow the money so they can be paid, but that only stands to make the state’s finances worse.

“They (the vendors) have not done anything wrong here. They need to be paid,” she said.

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6 Comments

  1. hot pockets

    The Illinois voters keep electing them back into office. The huge tax increase was used to pay for new things and the debt keeps growing. Those democrat politicians have the luck of the Irish. The Illinois voters have the brains of an ameba and no luck at all.

    Even if this new scam doesn't pass, the worst is yet to come. They'll need to raise the state income tax by another 2 percent, to 7 percent, to pay for obamacare.
     

  2. The Feds are paying

    One Smart Guy:  The Feds are paying the bill for increased medicare costs for adding patients to its rolls.  You sound like you need to read the ACA.  1.5 billion returned to consumers already because of provisions in this law.  Portability of insurance, no pre-existing condition can prevent you from being excluded from insurance.  Cost increases of all health insurance policies are already slowing down.  Please pay more attention to information that is not broadcasted on FOX "news".

    1. the feds are paying

      "The Feds are paying"  See, no problem at all.  The Feds are paying the bill, and all they have to do is have the magic fairies pick the money from the money tree, yeah, thats the ticket.  See, it's so easy, silly rabbits.

    2. Thats wonderful—the government pays and it’s free money

      Since the Feds pay [for now] I guess no taxpayers will pay—no taxes, no cuts in any programs.  No effect on the economy, no one anywhere sees any change to their life except everything is now taken care of by the Feds.

      Just free money they pick off the money tree.

    3. Feds pay the bill

      The Feds are only paying  part of the bill for a few years and the amount will be decreasing with each year. In 4 years 100 % will be paid by each state, except for the clear thinking states that are not opting in. The number I have been hearing is that Illinois will be required to raise the state income tax by 2 % Which is looking like 7%. Nobody knows for sure. You can only wait and see.

      It sounds like you, Obama, and Pelosi should read the ACA, better known as obamacare.

  3. You can’t spend and borrow your way back to prosperity

    Soon, millions more people will be dumped into Medicaid under Obamacare. Good luck trying to find a doctor who treats Medicare and Medicaid patients because more doctors are opting out of these government healthcare programs due to the fact that reimbursements are much lower than private insurance, and payment from the state takes about a year.

    Illinois can't even afford its Medicaid bills right now so what will the state do when an additional 150,000 people join Medicaid? The ballooning unfunded government union pensions along with the growing gargantuan Medicaid bills is a massive fiscal train wreck speeding out- of- control to a town near you.

    The unemployment rate in Illinois has hovered above 9 percent since 2008 and more businesses and people are leaving the state than entering it and somehow Topinka thinks that the economy is improving in such a manner that it would "enable the state to pay down the backlog."

    Yep, clueless politicians voted in by the clueless majority.

    Just take a good look at Detroit and ask yourself how the once mighty prosperous city is now going to declare bankruptcy even after a massive government bailout and then takeover of two auto companies.

    More government isn't the solution to the problem it IS the problem. 

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