Biz Waits For Illinois To Pay
Illinois’ mountain of unpaid bills is financially crushing some longtime customers and suppliers including medical service providers, dentists and non-profits that specialize in caring for the sick and elderly.
With a budget deficit that could exceed $10 billion at the end of next month and no resolution to a budget stalemate that’s nearly a year old, Illinois is holding back on paying longtime vendors, forcing them to rethink the way they conduct business with state government. Some have stopped bidding on state-backed contracts while others have been forced to continually cut costs and belt-tighten as they wait for their overdue payments.
One group of service providers, claiming they are owed $100 million, is suing top state officials for breach of contract and seeking payment. The city of Springfield is also backing legislation that would force Illinois to promptly pay utility bills that state agencies owe the municipality.
“Doing anything for the state is not the way to go,” said Wilma Beatty, co-owner of Springfield-based audio-visual contractor Beatty Televisual, which recently declined to bid on a $35,000 contract with the Illinois Department of Human Services.
Here’s a sampling of some other state vendors and customers who are hurting and waiting for payment:
- The City of Springfield is owed $12.6 million in unpaid electric and water bills. Springfield operates City Water Light and Power and has more than 200 accounts related to the state government. The agency last received a $6 million payment from the state in July 2015, according to a spokesman. In response, Springfield is getting behind legislation that, if approved into law, would make it a requirement for the state to pay its utility bills promptly.
- Memorial Health System, one of the biggest medical centers in downstate Illinois— is owed more than $83.6 million. The medical nonprofit operates hospitals in Springfield, Lincoln, Jacksonville, and Taylorville as well as other medical offices located throughout the state. There are no plans for layoffs or service reductions in light of the debt, but one of the system’s hospitals, Memorial Medical Center in Springfield, has delayed plans to construct an $80 million medical office building, a spokesman said.
- Stepping Stones Inc., a drug addiction treatment center in Joliet, has burned through $100,000 in reserves to maintain services, but still had to stop treating non-Medicaid patients in mid-February. By June 30, the end of its fiscal budget year, the state will owe the non-profit about $300,000.
- Illinois dentists are in pain. Greg Johnson, a spokesman for the Illinois State Dental Society, which represents about 66 percent of the state’s dentists and 800 dental hygienists, said that about 17,000 dentists nationwide including 8,693 in Illinois are owed about $125 million by the state. A whopping 90 percent of the total is owed to Illinois dentists, he said.
- Vendors to the Department of Aging are owed $212 million for non-Medicaid services. These expenses were incurred administering the Community Care Program, which helps seniors, who might otherwise need nursing home care, remain in their homes. Vendors clean and prepare meals, do laundry, shop, and run errands for the seniors in addition to helping seniors dress, bathe and follow special diets. More than 83,800 people participated in the program last year.
Eleven months into the state budget impasse, Illinois’ debts keep building. Without a spending plan, the state is unable pay any bills not required to be paid either through a court order or by law, such as Medicaid.
“Between the legislature and the governor, they have failed to do their most essential duty and responsibility and that is enacting a budget for the State of Illinois.”
-Pete McLenighan of Stepping Stones
As a result, about 10 percent of all state bills, about $3 billion, remain unpaid, according to the Illinois Comptroller’s Office. Most of these bills fall under the Illinois Department of Human Services and Illinois Department of Aging.
The failure to pass a budget may have “irreparably damaged the State’s capability to provide social services in the future,” according to a report by the Institute for Illinois’ Fiscal Sustainability at the Civic Federation, a public finance watchdog.
At the heart of the budget standoff is a disagreement between Republican Gov. Bruce Rauner and Democratic-controlled General Assembly.
“Between the legislature and the governor, they have failed to do their most essential duty and responsibility and that is enacting a budget for the State of Illinois,” said Pete McLenighan of Stepping Stones.
Pay Now Illinois, a coalition representing 64 service providers, filed a lawsuit last week against Rauner and other state administrators alleging that they have gone unpaid for almost a year.
The providers offer mental health care, operate rape crisis centers, and work to reduce pediatric HIV/AIDS transmission.
According to the lawsuit, Rauner violated the Illinois Constitution by vetoing appropriations for their contracts that the Democrats sent to him.
“While we understand that frustration is driving many worthwhile organizations to seek solutions anywhere, including the courts, the only solution is for the General Assembly to pass a balanced reform oriented budget as soon as possible.”
Rauner spokeswoman Catherine Kelly said in a statement
Andrea Durbin, chair of Pay Now Illinois, called the impact of the non-payment “devastating on many levels.”
“At its most fundamental, it hurts the families, communities and individuals our services were designed to help,” Durbin said. “It’s also damaging the human services infrastructure.”
Gov. Rauner’s office says the Democratic-controlled General Assembly is to blame for the impasse.
“While we understand that frustration is driving many worthwhile organizations to seek solutions anywhere, including the courts, the only solution is for the General Assembly to pass a balanced reform oriented budget as soon as possible,” Rauner spokeswoman Catherine Kelly said in a statement.
The Rauner plan has its allies in the business community.
Kim Clarke Maisch, state director of the National Federation of Independent Business, says that her organization continues to back Rauner in the budget fight. An informal poll of 620 of 11,000 total members in February showed that 88 percent supported Rauner’s agenda and wanted him to keep fighting.
“The attitude we hear is if we don’t turn the state around now, we’re never going to revive our economy and make Illinois a better place to do business,” Maisch said.
Others vendors, however, find their fiscal fortitude is being tested as they wait for their money.
Mike Holub has a dental practice in Chester, a southern Illinois city with an 8,421-person population, where the state-operated Chester Mental Health Center and Menard Correctional Center are two of the city’s largest employers. Illinois owes him about $150,000 for his services through an insurance company.
Since the city is so small, Holub says he cannot afford to turn away patients if they are state employees, or else they will get treated at other practices.
“I have functioned under the premise that it would eventually be paid,” Holub said. “That makes it tough to plan your future, tough to buy technology and equipment that might help the practice be a better practice. You put the brakes on all that because it’s like, ‘I don’t know when I’m going to get paid.’”