Last week, Illinois Comptroller Leslie Munger announced that the state’s pile of unpaid bills will grow to $10 billion by December. Munger, who was appointed by Governor Rauner, and is up for re-election in November, also predicted that the delay time for payments to social service providers and vendors who do business with the state would grow from 2 months to 6 months.
Munger also restated that lawmakers and elected officials would remain near the bottom of the pile, waiting several months to receive their paychecks.
But where are banks in that pile of bills to be paid? Giant Wall Street financial institutions such as JPMorgan Chase continue to make uninterrupted profits in Illinois, remaining somewhere near the top of the list for payment every month.
In the first six months of FY16, Comptroller Munger paid the banks more than $92 million on the predatory public financing deals known as toxic swaps. With a glaring backlog of unpaid bills, and an unresolved crisis in human services and higher education created by unpaid contracts and delayed and partial appropriations, this would be the time for Munger and the Rauner administration to look at all options to prioritize payments to lifesaving, critical, and essential services.
While the stop gap budget may provide some relief to service providers and small business owners who have gone more than a year without payment, we know from numerous reports that despite the stop gap budget, social service providers continue to close their doors, and others are not able to begin reinstating laid off staff, reopening facilities, or otherwise repairing the damage done by a year with no budget.
Lutheran Social Services will be unable to rehire any of the 750 employees it laid off or restore any of the 30 programs it was forced to cut as a result of the impasse. Higher education institutions and students are still in trouble, like Southern Illinois University which is maintaining staff reductions and layoffs, and MAP recipients who face uncertainty as to whether their awards will be honored.
Rauner has an opportunity at the end of this month to avoid adding another $870 million payment to the top of the pile. Such a payment would raise the bill backlog even more and further lengthen the time that service providers, small business owners and other vendors, MAP grant recipients, universities and legislators have to wait for payment.
At the end of this month, Governor Rauner can request a renewal of six letters of credit, taking action to avoid the immediate and early payment of all the future profits claimed by JPMorgan Chase and other banks on the state’s toxic swaps. After Governor Rauner makes the request, then it is up to the banks, who have enjoyed a privileged spot at the front of the payment line, to act as good corporate citizens.
This is an important decision. Governor Rauner and banks like Chase can decide to unnecessarily add another $870 million to the pile of bills, or they can make it possible for those funds to be directed to the institutions, small businesses and service providers who have gone for more than a year with no payment. It is time to start repairing the damage, not creating more.