Topinka: Illinois on pace to end Budget Year $8 billion in red

Comptroller warns of backlog, unaddressed obligations

 

Chicago, IL  – Illinois Comptroller Judy Baar Topinka on Wednesday announced that the state is on pace to end Fiscal Year 2011 with $8 billion in unaddressed obligations, and warned that it will continue to operate in the red until substantial structural changes are made to the budget.

The state’s Chief Fiscal Officer, Topinka sounded the warning as lawmakers enter the final stretch of the Spring Legislative session. While a variety of borrowing and fund transfers have been proposed to pay down the state’s bills, Topinka cautioned that long-term financial stability will only come with spending reforms.

“After years of hand-wringing about the state’s finances and deficit spending, here we are looking to end yet another fiscal year in the red,” said Topinka, who was sworn-in to office in January. “The prescription for our financial recovery is simple: stop spending more than we bring in. But sadly, that still has not occurred.”

In detailing the state’s fiscal outlook, Topinka noted that the Comptroller’s Office has 208,635 in unpaid bills totaling $4.52 billion. Those vouchers represent payments due to schools, hospitals, social service agencies and private businesses throughout Illinois for services already provided to the state.

That backlog is expected to remain at around $4.5 billion when Illinois ends the fiscal year on June 30, 2011. Beyond the unpaid bills, the state faces roughly $3.8 billion in additional obligations, including $1 billion in bills expected to arrive after the close of the fiscal year, $1.2 billion for State Employee Health Insurance and $850 million in corporate tax refunds.

In all, the state’s unaddressed obligations will total approximately $8.3 billion at the close of the fiscal year – just as it did at the close of Fiscal Year 2010, Topinka said. In making the announcement, the Comptroller stressed that the estimates may change depending on decisions made in the final weeks of the legislative session. Specific considerations which could become factors include: how the Governor manages unspent appropriations, any supplemental spending, and whether or not the state chooses to borrow additional funds.

Regardless of those short term actions, Topinka warned that long-term solutions are needed for state spending in order for the state to regain its fiscal footing. She applauded lawmakers for taking fiscally responsible action recently in approving the state’s pension and bond payments, and encouraged them to take the next step.

“I know firsthand that we have leaders in both parties who are committed to restoring our state’s fiscal integrity, and they are making progress,” Topinka said. “But we will never fully succeed without substantial spending reforms. That will continue to be my focus, and I look forward to working with members of the General Assembly in these final weeks of the legislative session to make them a reality.”