CHICAGO -- Illinois needs to borrow $150 million to $200 million more to keep pace with the spillover from the last fiscal year's unpaid bills.
Those bills could total $800 million by the end of September, Dawn Clark Netsch, the state comptroller, said yesterday.
Ms. Netsch said the $185 million general obligation short-term certificate borrowing on Aug. 26 did little to improve the state's bleak finances as the general funds balance at the end of August slipped to a record low of $7 million, while the general revenue fund balance dropped to $4.6 million, the second lowest month-end balance in history.
"The $185 million came in at 9 a.m. on a Friday. Six hours later we spent it all and we were still sitting on more unpaid bills," she pointed out.
Her office, she said, was currently facing a backlog of $320 million in bills under the state's so-called lapse-period spending, where bills incurred in the last fiscal year are paid three months into the new fiscal year with the new year's revenues. She also warned that total lapse-period spending, which was originally estimated to reach $590 million, could be as much as $750 million to $800 million by Sept. 30, the end of the lapse period.
Instead of borrowing in the municipal market, Ms. Netsch said, the state was unfiairly borrowing from its vendors, some of whom have been forced to seek loans, carrying interest rates as high as 11%, to tide them over while they wait for their state payments. In comparison, she pointed out that with the last short-term borrowing, the state paid an interest rate of only 4.8%.
However, Ms. Netsch is receiving no support for further borrowing from state Treasurer Patrick Quinn and Gov. Jim Edgar, the two other state officials that must approve any short-term borrowing under the state's Casual Deficits Act.
Ellen Feldhausen, a spokeswoman for the state bureau of the budget, said while the administration was keeping all of its options open, it did not feel there is a need for any further borrowing.
She pointed out that although sales tax revenues were down, income tax revenues had increased for fiscal 1992, which began July 1. She added that the bureau would have to look at full first quarter revenues before it would change its revenue estimates.
Marj Halperin, a spokeswoman for the treasurer, said the request for further borrowing must come from the governor and that Mr. Quinn has not formulated an opinion on the matter.
Ms. Netsch pointed out that while the money to service the old bills was coming out of the present budget, that budget also has to accommodate bills that will come due during the present fiscal year.
"I know the governor believes the budget is balanced, but if it is balanced at all it is balanced on quicksand," Ms. Netsch said.
Calling the state's cash-flow problem "extremely serious," the comptroller said the state was still feeling the effects of the recession on tax revenues.
Over the last month, Illinois' GO ratings have been downgraded to AA from AA-plus by Standard & Poor's Corp. and to Aa1 from Aaa by Moody's Investors Service. Both agencies cited the state's deteriorating financial position over the last two years that has resulted in increased deficits or lapse-period spending and smaller year-end cash balances. The state's current $27.5 billion all funds budget, which was passed by the General Assembly on July 19, calls for a year-end general funds cash balance of $200 million.