Behind on its bills, state shares $5 billion shortfall with businesses, nonprofits

October 21, 2011

Advocates, NEWS

NapervilleSun – Sun-Times Publication – October 21 – Susan Frick Calrman

Little more than three years ago, Illinois had a one-week turnaround for cutting checks to the entities submitting bills. By last June, the average delay had stretched to almost four months, according to the office of state Comptroller Judy Baar Topinka. Now the lag has become the norm.

Desperately treading in a rising tide of red ink, the state has adopted a deliberate policy of withholding billions of dollars’ worth of payments for months at a time. The practice, once done as a stopgap measure, has triggered a cycle of hardship for residents and some of the businesses that perform crucial government functions.

By early September, the state’s payables included about 166,000 bills worth a combined $5.1 billion. The unpaid invoices included more than 15,000 bills worth almost $1.4 billion due to other governmental units, and more than $306 million owed to the RTA. Payments due from the state in Naperville totaled more than $16.3 million.

An analysis of state documents done by the Associated Press found almost half the outstanding sum was more than a month overdue. Hundreds of bills date back to 2010 — and with some bills still in the pipeline, the actual amount owed is likely higher.

“This weighs on everybody,” said Patrick Skarr, vice president for advocacy, economic growth and quality of life for the Naperville Area Chamber of Commerce.

The past-due bills create a drag on the business climate and add to apprehensions that state tax increases billed as temporary could end up around much longer, Skarr said.

Chamber president and CEO John Schmitt noted that 159 Naperville organizations are owed some $16.3 million.

“It’s a sad day when the state can’t pay its bills. These businesses that are owed money, they have to pay their taxes on time. They don’t get a break on time,” Schmitt said. “It’s just another sign that in Illinois we have to right the ship.”

Lesser evil

The General Assembly has accepted the unpaid bills as an unpleasant necessity while its members claw their way out of deficits that once topped $13 billion. Lawmakers of both parties rejected Gov. Pat Quinn’s proposal to borrow money to cover overdue bills, although he vowed to try again when lawmakers reconvene Tuesday.

In the meantime, the state continues turning businesses, charities and local governments into unwilling short-term lenders, using their money to operate government and conceal the depth of the state’s financial problems.

Illinois grants “expedited payment” to vendors who say they’re on the verge of shutting down if they don’t get their money, but the process lacks clear rules. Quinn and Topinka each say the other has the last word on payments, and documents show a letter of support from a legislator — Republican or Democrat — can often shake loose money for vendors.

Leigh Ann Stephens wrote a letter in August “asking, pleading” for $50,000 the state owed the DuPage Center for Independent Living, where she is executive director. The agency manages properties adapted to accommodate tenants with disabilities, including the Illinois Center for Independent Living and Maple Court, both in Naperville.

It was the third time in two years Stephens sent a hardship letter warning that the center would close if it wasn’t paid. Her letter brought temporary relief, but it hasn’t reversed cuts. Stephens has laid off one of eight employees, stopped opening on Fridays, cut back hours for part-time workers and reduced salaries 7.5 percent for herself and the other full-time worker.

Like their clients, most of the employees have physical disabilities that include blindness, impaired hearing, cerebral palsy and other challenges.

“This is not just a job for me. It’s a way of life,” Stephens said. “I can be angry. I can be sad. I can be so mad that I cry. I have thrown things across the room.”

New reality

The state also is overdue in paying about $1.8 million it owes to the nonprofit Association for Individual Development in Aurora, which serves people with developmental disabilities. Even though the agency applied for the expedited payments, the state still owes for many categories dating back to July, said AID Vice President Wanda Thomas. The situation, which has compelled the agency to tap into its bank line of credit to cover bills, has “become the way we operate with the state of Illinois,” she said.

Beth Thomas, AID’s vice president of finance, is focused on the anticipated payments as well.

“I get up every morning at 5:15 and check the state comptroller’s website,” hoping a state bill has been paid to the agency, she said.

The late state payments have further aggravated an already tough financial situation nonprofits face with reductions in state funding, AID caseworker Rose Maxson said.

At College of DuPage, decision makers recognize that Springfield is chronically behind on its bills. They are taking no chances as they plan for the coming year.

“We are currently up to date on our state appropriations for our operating budget, (but) knowing that the state has been facing increasingly harsh financial conditions, as evidenced by the fact that the state currently owes public universities approximately $500 million … we have predicated our budget on receiving just one-third of payments that will be owed to us by the state,” said Joe Moore, COD’s associate vice president of external relations. “We are hoping for the best but we are planning for the worst.”

The fiscal blueprint works with some $1,064,000 the Glen Ellyn college receives from the state each month.

“We have planned our operating budget around receiving four of those” next year, Moore said.

All shapes and sizes

The state’s unpaid bills range from a few pennies to almost $25 million. In early September, for example, Illinois owed $108 to Edward Hospital in Naperville for an interest payment, $55,000 to a small-town farm supply business for gasoline and $810,000 to a child-nutrition program.

In Illinois, even death involves delays. Funeral homes were waiting for $2.8 million in overdue reimbursement for burying indigent people.

Skarr said the situation bodes poorly for the state’s jobless, who topped 10 percent this week.

“If there’s no relief on the horizon, that’s what weighs down on the minds of businesses and job creators,” he said.

The ongoing trend translates to another dubious distinction for the Land of Lincoln.

“I think you win the championship,” said Elizabeth Boris, an expert on nonprofit groups at the Urban Institute think tank.

Schmitt is heartened, at least a little, by discussions under way between those on both sides of the Springfield aisle.

“I would just encourage them, on behalf of all of our businesses, to continue to talk and continue to try to reach a solution,” he said.

The Associated Press and the Aurora Beacon-News contributed to this report.

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