No IOUs from Ill. government, but no money either

Thursday, May 13, 2010

SPRINGFIELD, Ill. – For 35 years, frail senior citizens in southern Illinois could turn to the Shawnee Development Council for help cleaning the house, buying groceries or any of the chores that make the difference between living at home or moving to an institution.
No more. The council shut down the program Thursday because of a budget crisis created by the state of Illinois' failure to pay its bills.
Paralyzed by the worst deficit in its history, the state has fallen months behind in paying what it owes to businesses and organizations, pushing some of them to the edge of bankruptcy.
Illinois isn't bothering with the formality of issuing IOUs, as California did last year. It simply doesn't pay.
Plenty of states face major deficits as the recession continues. They're cutting services or raising taxes or expanding gambling to close the gap. But Illinois is taking the extra step of ignoring bills.
Right now, $4.4 billion worth of bills, some dating back to October, are sitting in the Illinois comptroller's office waiting to be paid someday.
Shawnee Development, for instance, is waiting on about $380,000 in back payments, officials say. That amounts to one-quarter of the council's budget for senior care in seven southern counties. "It makes me mad as heck," said Georgia Smith, a 66-year-old volunteer at the agency. Seniors, she said, "are used to paying our bills, paying our way."
Illinois' deadbeat reputation has created some embarrassing situations.
A supplier refused to sell bullets to the Department of Corrections unless it got paid in advance. Legislators have gotten eviction notices for their district offices because the state wasn't paying rent. One legislator said he had to use campaign funds to pay the telephone bill after service was cut off at his office.
The practice of simply putting off payments became commonplace under ex-Gov. Rod Blagojevich, who liked to spend but adamantly opposed a tax increase to help cover costs. Before he was arrested and kicked out of office, Blagojevich's toxic relationship with legislators essentially paralyzed government, so bills just piled up.
The strategy also may have been helped along by Illinois' "anything goes" political culture. When voters believe government decisions hinge on campaign contributions and shady deals, they're less likely to expect responsible fiscal practices.
Some schools have tried to shame Illinois into paying by posting signs announcing how much the state owes. The website details the state's financial mess. Associations hold rallies and write letters to the editor.
The state still remains months behind.
Illinois is on track to end the current fiscal year with about $6 billion in unpaid bills. Budget proposals for the coming year — when the state faces a $13 billion deficit — assume the same thing will happen again.
The state owes money for all kinds of services provided in its name, such as medical care for the needy, home care for the elderly and disabled and day care for the working poor.
State government promises to reimburse all those organizations for at least part of their costs. When the state doesn't pay its bills, they're stuck trying to figure out how to make ends meet.
Most have spent their reserves and cut corners wherever they can, laying off employees, cutting back hours, requiring workers to take furloughs.
Recovery Resources, a substance-abuse treatment center in Quincy, is waiting for $200,000 from the state, which provides about two-thirds of the center's annual budget.
The center has cut 10 jobs over the past two years, said executive director Ron Howell. It shut down its services for adolescent addicts. People who call for help now wait three to four weeks for an appointment.
"The situation, for us, has been almost normalized, and that's the scary part," Howell said. "If I'm not screaming on the edge of self-destruction, it's because this has numbed us."
Many agencies have borrowed money to keep the doors open, but service providers say that's getting harder to do — banks are more reluctant to lend money on a promise that the state will pay up someday.
"We have had members whose banks have told them it is the creditworthiness of the state of Illinois that is their primary concern," said Janet Stover, executive director of the Illinois Association of Rehabilitation Facilities.
State leaders have no plan to catch up on the bills anytime soon, not with a $13 billion deficit to tackle. The Pew Center on the States said last year that in percentage terms, Illinois' deficit is nearly as big as the gap in California, the gold standard for states in crisis.
Democratic Gov. Pat Quinn has called for an income tax increase, but any money from that would be allocated to other areas, not paying routine bills. Republicans want to tackle the deficit through spending cuts, which would also mean letting old bills go unpaid.
It's likely that no dramatic movement in either direction will take place until after the November elections.
Illinois government owes about $2.5 million to Sparc, a Springfield organization for people with developmental disabilities, said chief executive officer Carlissa Puckett.
Sparc has borrowed up to $1.1 million through a line of credit. Turning away clients would be the last resort, she said.
Puckett sounds matter-of-fact as she discusses scrimping on paper and pencils. "Why cry if nobody is going to listen to you?" Puckett said. "We're going to keep our head up and figure out how to make it work."