Illinois 4 billion in the hole

[Lithium381]

In Illinois, you’re never too big or too small to get stiffed by the man. The strapped state government, awash in debt, is now $4 billion behind in paying its bills. At least 8,000 businesses, charities, and state agencies have been waiting patiently—or not—for the state to scrape together enough money to settle up. IBM (IBM) is hoping to see $1.1 million for equipment and services it provided the government. Office Depot (ODP) is out $660,955. And the 17th Street Bar & Grill in downstate Sparta, Ill., is sitting on a $340.52 tab. At least 114 companies are due more than $1 million. To put the mess in perspective, the backlog is larger than Delaware’s entire $3.5 billion budget.

While other states have at times gotten behind in paying their bills—California briefly issued IOUs to cover a shortfall in 2009—Illinois is in a deadbeat class by itself. The list of debts has been growing for three years and amounts to more than 10 percent of the state’s general budget for the coming fiscal year.

IBM and Office Depot can get by just fine while they wait for that elusive check to arrive. Smaller businesses can’t shrug off the holes in their ledgers so easily. Some have been forced to fire workers, cut services, or try to obtain loans to stay afloat. “Banks have refused us a line of credit because of the state,” says David Baker, executive director of the nonprofit Open Door Rehabilitation Center in Sandwich, Ill., which is owed $880,000. “We’ve had a longtime relationship with bankers, but now they wonder, ‘What if the state never pays you?’”

Until recently, Illinois owed the South Suburban Council on Alcoholism and Substance Abuse, in the Chicago suburb of East Hazel Crest, about $1.4 million. The nonprofit has an annual budget of $5 million, and 75 percent of its revenue comes from state funds. To stay in business, Chief Executive Officer Allen Sandusky laid off nearly a third of his 155 employees and had to take out a $1 million line of credit at 6 percent interest. “Somehow the human service system tends to be on the lower end of the priority list,” says Sandusky, who finally got paid.

Kelly Kraft, a spokeswoman for Illinois Governor Pat Quinn, says settling the debts is a “key component” of the state’s plans to climb back into the black. In January, lawmakers approved breathtaking new taxes: a 67 percent increase in the state income tax and a 46 percent hike in the corporate income tax. The estimated $7 billion those taxes raised still weren’t enough to cover the projected $13 billion budget deficit in fiscal 2011. Quinn, a Democrat, proposed selling bonds to make up the difference. Republicans in the legislature argued the state shouldn’t borrow itself out of trouble and blocked the plan. “We’re going to try and work our way out of it,” says state Comptroller Judy Baar Topinka. “Don’t expect this to happen tomorrow, because it won’t.”

Illinois, which borrowed to make its two most recent annual pension payments, is tied with California as the state with the lowest credit rating, in the estimation of Moody’s Investors Service (MCO). States covet an AAA rating from Moody’s. Illinois ekes out a single A. The state’s stack of liabilities contributes to its dismal score.

While the politicians in Springfield dither, new bills are piling on top of the old ones. Illinois hasn’t stopped spending—$5.5 million in accumulated gasoline charges to Wright Express Financial Services (WXS); $1.4 million to Xerox (XRX); $11,300 to La Roma Pizza in downstate Canton.

Delayed payments are also affecting hospitals, universities, and public school districts, along with funeral homes that provide burial services for indigent citizens. Eight of the state’s 10 largest nongovernment creditors are health-care or social-service providers whose bills total $176.2 million, according to the Comptroller’s Office. Bills are paid in the order they are received, which for many businesses means a wait of six months or more. The state has made some hardship exemptions, but a spokesman for the Comptroller notes that whenever someone moves up to the front of the payment line, it means everyone else gets shoved back.

Baker, whose Open Door Rehabilitation Center treats and provides shelter for the developmentally disabled, hopes he can stay open long enough to see his $880,000. “Our only business is with the state,” he says. “You cross your fingers and live another week.”

The bottom line: Even as debt-ridden Illinois struggles to clear a vast backlog of bills, it continues to rack up charges it cannot afford to pay.

http://www.businessweek.com/magazine/waiting-for-a-check-from-illinois-get-in-line-07012011.html
I just checked the map and Illinois looks like a blue state....

 

[Lithium381]

A pretty sizeable tax increase raised around 7 billion dollars..... yet they have a 13 billion dollar DEFICIT??? They wanted to do bonds to get out of debt W T F?!!!
Sounds like the state isn't someone I'd like to do business with..... the federal government will find itself in the same situation if we keep piling on debt like this. That's why we have credit ratings and such. Why are we so worried about NOT raising the debt limit when continuing down this path is even more destructive

 

[Rock Hydra]

Hah. When do you get a choice if you wanna do business with "government"?
Behind all that paperwork is always a gun.=/

 

[dmcowen674]

Where's Al Capone when you need him?

 

[dfuze]

A pretty sizeable tax increase raised around 7 billion dollars..... yet they have a 13 billion dollar DEFICIT??? They wanted to do bonds to get out of debt W T F?!!!
Sounds like the state isn't someone I'd like to do business with..... the federal government will find itself in the same situation if we keep piling on debt like this. That's why we have credit ratings and such. Why are we so worried about NOT raising the debt limit when continuing down this path is even more destructive

I think it's saying that it raised 7 when it needed to cover 13 billion so if I am reading it right they only have 6 left which of course is still a huge hole. :\

 

[nonlnear]

Where's Al Capone when you need him?

He's the mayor of Chicago.

 

[rudder]

Illinois needs to raise the sales tax to 18%. That will fix everything.

 

[Schadenfroh]

Someone forget to bribe the accountants to keep this quiet?

 

[IndyColtsFan]

He's the mayor of Chicago.

Damn it, you beat me to it.

 

[Doc Savage Fan]

Fiscal responsiblity does not seem to be a strong suit for Democrats. Increased taxation without significant spending reductions...nice...and some actually wonder why they get tagged with the "tax & spend" label.

 

[ichy]

Great job Blago!

 

[K1052]

The state was already so far behind from previous years that the tax increase isn't enough to wipe out the past due debts/commitments immediately. The borrowing package that was supposed to catch the state up on all payments was shot down by the legislature. Ironically that would have been less expensive than continuing to incur late charges from vendors at higher rates than we could have gotten in the bond market.

 

[GoPackGo]

Illinois is "WINNING!"

 

[Zargon]

Great job Blago!

quinn isant helpng much

the first thing he did as gov was repeal a bill that had cut millions in spending by closing some state parks, yeah its nice he reopened them and all, but it was like 40 mil or somthing out of the budget that we dont have

The state was already so far behind from previous years that the tax increase isn't enough to wipe out the past due debts/commitments immediately. The borrowing package that was supposed to catch the state up on all payments was shot down by the legislature. Ironically that would have been less expensive than continuing to incur late charges from vendors at higher rates than we could have gotten in the bond market.

I was under the impression that this tax hike is for 4 years then we should be 'even again' and its 'supposedly' going to 'expire'

no one beleives that though

 

[Doc Savage Fan]

Unfit to govern.

 

[K1052]

I was under the impression that this tax hike is for 4 years then we should be 'even again' and its 'supposedly' going to 'expire'

no one beleives that though

It's written into the legislation that was passed. Since it is a sunset provision another act of the legislature would be required to extend.

 

[fskimospy]

A pretty sizeable tax increase raised around 7 billion dollars..... yet they have a 13 billion dollar DEFICIT??? They wanted to do bonds to get out of debt W T F?!!!
Sounds like the state isn't someone I'd like to do business with..... the federal government will find itself in the same situation if we keep piling on debt like this. That's why we have credit ratings and such. Why are we so worried about NOT raising the debt limit when continuing down this path is even more destructive

Uhmm, you realize Texas had a $20 billion dollar deficit too and it's as red as they come, right? That's what happens in recessions.

Federal debt and state debt are literally nothing alike. We are so worried about not raising the debt limit because it is basically universally agreed that it would cause a global economic catastrophe. I am unaware of any credible economist that believes issuing more debt would be even more destructive than a US default. Can you provide links? Or were you just making shit up?

 

[piasabird]

I have my doubts whether the US and some of these states can keep up with their current Interest payments, Much less pay off the debts. Every time you borrow money it takes longer and longer to pay the interest so the principle takes even more years to pay off. At some point default or massive restucturing of Government and Spending becomes the only option.

You can fail to pay your bills for only so long. Illinois is already $2,000,0000 behind on their repayment of matching funds at our community college district which is located near St Louis, MO, on the Illinois side. So Chicago must have a shortfall which is over 10 times of that.

So what would happen if all the community colleges suddenly shut down? They function as the cheapest option for poor people who want to go to college and many people start at the community college and then go on to a university. Also it is the community college that handles things like GED, and other forms of basic community education and community support. No union found here.

I would not be too shocked if Illinois abolished teacher's unions and cut back on pay and benefits. It seems to be a trend to save money.

 

[Zargon]

It's written into the legislation that was passed. Since it is a sunset provision another act of the legislature would be required to extend.

yup.

supposedly there are controls about spending cuts that if they dont happen it expires as well?

 

[piasabird]

For years teacher unions have held the people of Illinois at gun point. Now it is time for the payback. There is only so much that higher taxes can do. Once you have raised taxes and fees up as high as you think you can get away with, then it is time to start cutting costs or firing people in government jobs. Illinois usually starts by laying off teachers. If you are a teacher you could be layed off.

I think if they just fired some of the superintendents in the school system things might break even.

Expect the police to give out as many tickets as possible to make up their budget shortfall.

 

[Zargon]

For years teacher unions have held the people of Illinois at gun point. Now it is time for the payback. There is only so much that higher taxes can do. Once you have raised taxes and fees up as high as you think you can get away with, then it is time to start cutting costs or firing people in government jobs. Illinois usually starts by laying off teachers. If you are a teacher you could be layed off.

I think if they just fired some of the superintendents in the school system things might break even.

Expect the police to give out as many tickets as possible to make up their budget shortfall.

my wifes union just signed a very reasonable contract with a very small 'raise' in it. so did another local district.

last summer another local district demanded huge raises ETC and ended up striking for a while before taking a still unreasonably high deal that was much lower than their demands, and now everyone locally hates them :awe:

 

[waggy]

Il is so mismanaged (and has been for fucking decades) its rather amusing.

the amount of corruption is insane. not to mention most of the state is ignored when it comes to spending tax money. head 200 miles outside of chicago area (besides the few big cities in teh south) and it gets bad. hell southern il is really fucked up. high tax's and nothing to show for it.

once you add in property tax, income tax, sales tax etc yo uwould be amazed at how much IL taxpayers are paying.

not to mention Fee's on everything, the tollway that was only sopposed to be 5 years (that was 30 or so years ago) and such. its amazing we are so short of money.

 

[fskimospy]

Il is so mismanaged (and has been for fucking decades) its rather amusing.

the amount of corruption is insane. not to mention most of the state is ignored when it comes to spending tax money. head 200 miles outside of chicago area (besides the few big cities in teh south) and it gets bad. hell southern il is really fucked up. high tax's and nothing to show for it.

once you add in property tax, income tax, sales tax etc yo uwould be amazed at how much IL taxpayers are paying.

not to mention Fee's on everything, the tollway that was only sopposed to be 5 years (that was 30 or so years ago) and such. its amazing we are so short of money.

Illinois's taxes are definitely higher than average, but they aren't dramatically so. (IL ranks #13 according to the tax foundation) The average US state and local tax burden is 9.8% according to them, and IL clocks in at 10%. 0.2% higher than average wouldn't exactly amaze me.

 

[RbSX]

All I can say is.. LOL.

 

[busydude]

hell southern il is really fucked up. high tax's and nothing to show for it. once you add in property tax, income tax, sales tax etc yo uwould be amazed at how much IL taxpayers are paying.

I live in So. IL.. and my professor was telling me how high the property taxes are.. I just opened my mouth wide open when I heard that.. really insane.