SPRINGFIELD — Government agencies in Illinois will be required to report monthly on all bills they've incurred, after senators overwhelmingly reversed Gov. Bruce Rauner's veto Wednesday of a measure the state's check-writing official advocated as a critical step toward digging out of massive debt.
Democratic Comptroller Susana Mendoza pushed the plan, arguing it would help her prioritize debt payments as the state faces a $16.7 billion mass of overdue bills. In vetoing it, the Republican governor argued his political rival was trying to "micromanage" his budgeting authority, and he later expressed concern the proposal could ultimately lead to even more spending.
Nearly all lawmakers in the Democratic-controlled General Assembly sided with Mendoza on the question. The Senate, without discussion, overrode Rauner's veto of the "debt transparency act" by a 52-3 vote, two weeks after the House voted 112-0 to reject the veto. The measure takes effect Jan. 1.
“There is no reason that state agencies cannot do a better job of communicating with the comptroller each month about invoices they’ve received that will need to be paid,” said Sen. Andy Manar, a Bunker Hill Democrat and the chief Senate sponsor of the act.
Mendoza also announced Wednesday that she has begun using billions of dollars the state borrowed to pay off big chunks of that debt, built during a two-year budget stalemate between Rauner and Assembly Democrats.
"I'm laser-focused on maximizing this opportunity for taxpayers," Mendoza said in a statement.
The reporting law updates the current requirement, which calls for state agencies to report annually in October on bills they had on hand as of June 30. Mendoza said that information is critically out of date and monthly data would help her know which bills are coming, which should be paid first and which of 900 state accounts should fund them.
The monstrous backlog is one distasteful legacy of the budget standoff, the nation's longest of any state since at least the Great Depression. It ended in July when Democrats adopted an income-tax increase and annual budget over Rauner's vetoes.
“The financial pressure on Illinois government has not lifted, as evidenced by the growing bill backlog,” Manar said. “Businesses all over Illinois are patiently waiting to be paid for services and goods they’ve provided. The least we can do is engage in basic, responsible accounting practices and communicate across offices as we try to work through this.”
Mendoza said she would start making major payments on the backlog with $6 billion raised by a sale of state bonds that Rauner authorized. Despite Illinois' worst-in-the-nation credit rating, it borrowed the money at a favorable 3.5 percent. That's decidedly lower than the 12 percent annually owed on about one-third of the backlog subject to late-payment interest penalties. The state already owes about $900 million in penalties alone.
Much of those IOUs are health care-related and eligible for federal dollar-for-dollar match.
"These payments will effectively stop the bleeding of late-payment interest penalties on this portion of the backlog," Mendoza said.
She said about $2.5 billion will be spent immediately on outstanding medical bills. Nearly $4 billion will cover unpaid state health insurance claims owed to medical providers in the next few days. During the coming weeks, $2 billion in federal matching funds will go toward additional state medical bills.