February 28, 2013

Not News: Projected Growth in Unpaid Bills Shows State of Illinois on Path to Total Breakdown

On Monday, the Insitute for Illinois’ Fiscal Sustainability (IIFS), an outfit associated with the Civic Federation, a “nonpartisan” organization which appears to have leftist instincts and funding, warned that the state government’s $8 billion stack of unpaid bills will grow to $22 billion in five years. IIFS correctly blames out of control pension costs, and recommends several reforms which don’t seem to match the urgency of the situation.

One thing the report doesn’t do, concerning which the press appears to be completely incurious, is estimate how long it will take vendors in President Barack Obama’s Democrat-dominated home state to get paid if the backlog of unpaid bills really becomes that large. The answer, in brief, is: “so long that no one with a brain will want to do business with the state, likely causing its government to completely collapse.”

There are a couple of clues as to what would happen to those foolish enough to continue doing business with the State in the full IIFS report (large PDF). Here’s the first, at Page 46 (bolds are mine throughout this post):

Illinois has dealt with its General Funds deficits by delaying payments to vendors, social service agencies and local governments and paying those bills from the next year’s revenue. The State typically has two months after the close of the fiscal year to pay off the prior year’s bills. This lapse period has been extended to six months—through December 31—for the last three fiscal years due to the large amount of outstanding bills on June 30. Unpaid General Funds bills are expected to increase to $18.9 billion at the end of FY2018 from $4.3 billion at the end of FY2013.

If it takes six months to pay off the current level of unpaid bills, one would expect that will take over two years for General Funds bills to get paid if their amount is over four times larger.

Here’s the second clue (Page 36):

Unpaid health insurance bills grew to $1.4 billion in FY2012 and are projected to increase by $218 million in FY2013 due to the funding shortfall. As a result of insufficient funds, some doctors are waiting more than 11 months for the State to pay claims.

If current trends hold, it would appear that docs will have to wait well over three years to get paid if they’re dumb enough (or are forced) to actually provide any services to patients whose claims are paid by the state.

What sane businessperson will do business with the state under these conditions?

These stats virtually scream that the whole enterprise is not very far from the brink of collapse. But the report, funded largely by the left-leaning John D. and Catherine T. MacArthur Foundation (see Page 2), doesn’t go there. Maybe they’d rather not, but that doesn’t mean that a journalist with even rudimentary math skills shouldn’t have figured out what I’ve noted above by now.

This should be national news, and isn’t — but the federal government having to reduce projected spending increases by nominal amounts is a virtual national crisis.

The Associated Press has an unbylined perfunctory four-paragraph regional story, but, based on a search on “Illinois,” nothing at its national site. A Google News search on “Illinois unpaid bills” (not in quotes, sorted by date), returns a very short list of local and regional results.

Cross-posted at NewsBusters.org.

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