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IL: Crushing debt squeezing out schools, services in Land of Lincoln

By   /   November 29, 2012  /   1 Comment

GOING BROKE: The state of Illinois.

By Jayette Bolinski | Illinois Watchdog

SPRINGFIELD – The weight of Illinois’ crushing financial problems will worsen by at least $3.6 billion next year, one expert warned this week, and that means at least $3.6 billion less for things like schools, roads and help for the poor.

Schools — from elementary through universities — are asking the state to send more money back their way, but it’s practically out of the question, said Jerry Stermer, budget director for Gov. Pat Quinn.

“Each of those groups are asking to at least get back to where they were, and we don’t see available dollars to do that,” Stermer said.

The problem is that Illinois continues to put off paying its bills and liabilities. That, coupled with bleak revenue projections that don’t come close to keeping up with spending, has created a gigantic problem the state can’t overcome.

And more problems are coming. Stermer cited five areas that will put the most pressure on the state’s finances next year:

  • Public-pension financing — Illinois now has an estimated $96 billion in unfunded pension liability,  the worst of any state in the country. Stermer said it’s a problem seven decades in the making. “This is a squeeze on everything else,” he said. “This is a required contraction of dollars available for public universities, elementary and secondary education, human services, public safety and other things funded by the general revenue.”
  • Unpaid bills — As of this week, the state’s backlog of unpaid bills stood at $9 billion. Quinn is floating the idea of borrowing money to pay off the overdue bills, but others are balking at the plan.
  • Employee health payments — The state has not set aside enough money to keep up with payments to medical providers treating insured current and retired state employees. The state is running up to 500 days late in paying the providers. The backlog is part of the state’s overall pile of unpaid bills.
  • Community Care program — The state funds a Department of Aging program that enables senior citizens to have in-home care for less money that it costs for the state to pay for them to go to a nursing home. Stermer said the program is growing because more people are getting older and need help. The state needs at least $173 million more for the program.
  • Abused and neglected children — The state needs about $38 million for investigations and follow-up work required for cases of abused and neglected children throughout the state, something it has made cuts to in the past.

Quinn has proposed borrowing $4 billion to pay down the backlog of bills, but that has left some crying foul. Comptroller Judy Baar Topinka urged the governor and lawmakers not to repeat the same mistakes they’ve made in the past by borrowing money and getting the state even deeper into debt. She also suggested that small improvements in the economy could help the state get the bills under control.

“I think you’ll find a lot of folks will be hurt because of the consequences of this,” she said. “Even though they get a temporary boost (from borrowing money), it will be very temporary and very soon we will be right back to where we started. It is the structure. That is the problem. If you don’t get at the problem — all of these are symptoms — you will continue to be here doing the same thing.”

Illinois is between a rock and a hard place when it comes to the borrowing issue, said former state lawmaker and longtime Statehouse observer Jim Nowlan.

“It’s indefensible what we’re doing to people who we owe money, and that’s increased the cost of government because people who bid on contracts with the state add 10 percent or 15 percent because they know they’re going to have to carry the account receivable for so long,” he said. “If the economy were to boom again, we’d probably be in a much stronger position than we find ourselves in.”

But until then, Illinois will continue to search for some kind of balance between spending and revenue.

“There’s no requirement that we provide all of the services that we provide today. We can lower the amount of state spending for schools even further, we could eviscerate the public universities by cutting spending even more than we have there,” Nowlan said, noting that states such as Alabama, Georgia and South Carolina offer minimal services to residents. But they’re also among the poorest states in the country.

Could Illinois find itself in the company of those states when it comes to the services? Possibly, but doubtful, Nowlan said. Illinois, despite its difficulties, is a relatively rich state.

“I would say the culture of the state is such that we won’t allow our services to sink to intolerably low levels and that we will figure out some way to maintain at least a close to average level of services overall,” he said. “But it’s going to be difficult to do and it will take several years for us to climb out of our hole.”

Contact Jayette Bolinski at jayette.bolinski@franklincenterhq.org. Find Illinois Watchdog on Facebook and follow us on Twitter @ILSthouseNews.

— Edited by Kelly Carson, kcarson@watchdog.org

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  • Edward

    It’s great you guys are bringing this information to more people. A major part of the apathy involved with our budget is lack of information to the general public. With more informed parties our chances of overcoming these obstacles increases exponentially.

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