The financial collapse of Illinois is accelerating
John O'Connor of the AP has just broken the news that the unpaid bills of the Great State of Illinois have reached the awe-inspiring sum of $16.5 billion.
Illinois is chasing a moving target as it tries to dig out of the nation's worst budget crisis, and a review obtained by The Associated Press shows $7.5 billion worth of unpaid bills – as much as half the total – hadn't been sent to the official who writes the checks by the end of June.
Although many of those IOUs have since been paid, a similar amount in unprocessed bills has replaced them in the last three months, Comptroller Susana Mendoza's office said Monday. That's in addition to $9 billion worth of checks that are at the office but being delayed because the state lacks the money to pay them.
Various bureaucratic tricks are being performed to slow down payment, but they all amount to stiffing the vendors, borrowing their capital at no immediate cost.
In some cases, agencies were waiting to send their receipts to Mendoza because lawmakers haven't approved the spending. For example, the Department of Corrections had $471 million in unpaid bills on hand as of June 30 largely for that reason.
"Ascertaining the precise nature of the state's past-due obligations and liabilities is an essential component of responsible cash and debt management," the Democratic comptroller wrote in a letter to Republican Rep. David McSweeney, a budget hawk from Barrington Hills who requested the review.
O'Connor covers the maneuvers going on to finesse the problem away, none of which will solve it.
In the long run, which is running toward us now, vendors refuse to do business with you when you finance yourself with accounts receivable, the business jargon name for what Illinois is doing. And when you can't buy stuff, the financial collapse becomes too acute to disguise.
Hat tip: Peter von Buol