By: Ted Dabrowski and John Klingner

The depth of the financial and economic impact of the Coronavirus is impossible to predict since we don’t know how far the virus will spread or how long the economic shutdown will last. But we do know that pension shortfalls will jump, borrowing will increase and the state budget hole will widen dramatically. Unfortunately, it will take months before all those numbers are summed up and reported.

In the meantime, one number Illinoisans can keep an eye on is the state’s unpaid bill backlog, which currently stands at just over $7.5 billion. The state has been notorious for not paying its bills on time since 2005 and its backlog jumped to almost $17 billion in 2017.

As the Coronavirus crisis deepens, don’t be surprised if unpaid bills begin rising again.

Keep in mind that the unpaid bill number can be manipulated in many ways – we’ve covered that in detail – so the state can make the backlog look better than it really is. However, it can still serve as a good gauge for how the state’s finances are holding up under the shutdown.

Illinois pols have constantly overpromised pension benefits, passed unbalanced budgets and hiked spending, all of which have left the state with a chronic bill backlog.

There’s a real human cost to that backlog, which has long been an indicator of Illinois’ deadbeat status. Those billions should have already been paid to thousands of contractors across the state, many of them small businesses and social service providers hardest hit by the shutdown.

The pressures on the state are going to be intense as sales and income taxes and a host of other revenues shrink along with the economic freeze. The Commission on Government Forecasting and Accountability expects revenue losses of over $8 billion for the state over the next few years. Unless the government reduces its operating costs in line with the shutdown – which it shows no signs of doing – expect the backlog to jump.

Unpaid bills reached a high of $16.7 billion in 2007, but the state government borrowed $6 billion via long-term bonds to bring the backlog down to just over $9 billion in November of 2017. This time around, unless the federal government steps in, borrowing money will be much more difficult. Barring some type of bailout, it’s easy to see the bill backlog rising again.

For sure, other numbers will eventually reveal the true depth of just how unprepared Illinois was for this crisis. But in the meantime, just follow the unpaid bills.

Read more about the impact of the Coronavirus on Illinois:

*Cover photo via Zoli Erdos

33 Comments
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Poor Taxpayer
6 months ago

Everyone is wasting their breath if they think Illinois will solve its HUGE PENSION problem.
Never going to happen, Unions will sue right away and taxpayers will PAY, PAY, PAY.

s and p 500
6 months ago

The state should make a “good faith” effort to preserve cash and get pensions under control, so that we know they admit there is a problem. Philly School District made a good faith effort to keep the kids learning. They bought 50,000 chromebooks even if people are too scared to deliver them and many of the kids don’t have home wi-fi, and teachers don’t know how to set up Google classrooms.

https://thenotebook.org/articles/2020/03/30/jeopardizing-health-philly-principals-teachers-leery-of-plan-to-distribute-50k-laptops/

Rick
6 months ago

For companies it’s all about cash right now, hoping you had cash prior, preserving cash now, getting a bridge loan, anything to stay in existence until this passes. Illinois has no capability or will to preserve cash.

debtsor
6 months ago
Reply to  Rick

The coronavirus panic will stay around longer than most businesses will be able to stay solvent.

Rick
6 months ago
Reply to  Rick

Unpaid bills is all about cash, yes it’s an excellent indicator.

Mark Felt
6 months ago

Several years ago I heard a story about a medical gas supplier to Cook County. Cook County was over 12 months late in paying its bills to this supplier for medical gases. When the owner of this company threatened to cut off deliveries, Cook County responded by saying they would move to another supplier. Unfortunately for Cook County the medical gas supplier new the other suppliers who could supply the type and volume of gases needed by Cook County hospitals. All the other suppliers refused to do business with the county. As a result, this bill was quickly paid to… Read more »

Susan
6 months ago

Sincere question: what is the inflection point at which “insurance ” no longer represents substantive value? Insurance is an ambiguous financial contract with zero abilty to provide the goods and services it is charging clients to.” Insure provision of”. At some number, it is more reasonable to keep cash in order to pay an actual licensed and skilled medical professional, than to pay a thousand or thousands a month for a worthless financial option contract. What is that number? Start research by learning Medicare reimbursement rates. Check DRG reimbursements for the top 10 causes of mortality in America. Do a… Read more »

Illinois Entrepreneur
6 months ago
Reply to  Susan

One of the benefits of insurance is negotiated rates and bargaining power. As an individual cash buyer of health services you have limited bargaining power for even pre-determined service needs. Emergency needs are even worse. Why would they give you Medicare reimbursement rates? You have no leverage to demand such low rates, and they couldn’t care less if you walk away. And how would you know which hospital to negotiate with in order to prepare for a cardiovascular event or other emergency? The cost of time and knowledge to negotiate with a health service entity is usually beyond the individual,… Read more »

Susan
6 months ago

You are expressing inaccurate and dated information serving only to discourage people from even trying to investigate alternatives.
Many sources exist for research here are 2:
Truecostofhealthcare.org David Belk MD
Physiciansagainstdrugshortages.com
Sources for medical tourism abound.
Cleveland Clinic among others posts testing and procedures prices.
Independent labs and imaging centers often charge full prices less than copays, let alone the INFLATED insurance negotiated price if yourre under deductible.
Goodrx.com makes it easier to discover the many times it costs less to pay cash for generic pharmaceutical than the INFLATED insurance negotiated copay.

Illinois Entrepreneur
6 months ago
Reply to  Susan

Well, it sounds like you answered your own question. I’m sorry I responded.

Susan
6 months ago

You’re right, and i take your point, and apologize for the rude tone of my comment.

Illinois Entrepreneur
6 months ago
Reply to  Susan

No harm, and thank you. The one negative about the internet is that it often lacks tone, and it’s sometimes hard to decipher where someone is coming from.

For the record I think you have interesting insights, and I was just adding my bit to it.

As someone who studied economics, I look at these “out-of-the-box” propositions with great interest.

Susan
6 months ago

Thank you. Only through open minded truth-seeking, right?
I admit to having a short fuse with predatory sociopaths like…those who have bankrupted Illinoisand now are gorging like at an orgy on free fed money.

Susan
6 months ago

Unpaid bills for medical provision are included in this backlog.
Unpaid bills for defined benefit pension recipients including their ihealrh nsurance providers—are not unpaid. Ever.

Taxpayers should ask themselves: why are financial option contracts aka ‘health insurance ‘ fully paid when the actual providers of actual healthcare are not?

Health insurance is an option contract, expiring monthly, for purchase of unknown goods and services at undisclosed prices, from non-obligated third party vendors.

Goodgulf Greyteeth
6 months ago

A blind man with a stick can see where this is going. Leading up the the “Fair Tax” vote in November, it’ll be Governor Tax Cheat endlessly harrumphing, “Illinois would have been fine until the Wuhan Bat Soup Virus, and Orange-Man-Bad’s failure to give Mike-n-I billions to make up for his mistakes.” The same old cabal of gerrymandered Springfield lickspittles will be re-elected, without having been persuaded to disenthrall themselves from the influence of powerful guvmn’t-employee unions, the Medicaid Industrial Complex, and the byzantine Nanny-Day-Care-Camoflauged-as-Education lobby. Our taxes will go up, job opportunities will contract, our population will decline, and… Read more »

Dave
6 months ago

Ordinarily I would agree with you. Your prediction may turn out completely correct. But ……… this is an extraordinary event, unprecedented, and foolhardy to automatically assume this event will turn out like the rest. The anger stage of this event has yet to arrive. We are still dealing with the shock. All bets are off if and when the anger stage arrives. God bless everyone. Stay strong my patriots.

Goodgulf Greyteeth
6 months ago
Reply to  Dave

Hardly “foolhardy.” Illinois taxpayers have suffered with a pestilential bankruptcy of finances and governance that’s arched in a relentlessly-worsening direction ever since the “better than no deal at all” pension-ramp. I don’t “automatically” assume that what results from the virus will be higher taxes, increased debt, contracting employment and declining population. I look at a long record of too few being angry enough about bad decisions that resulted in poor outcomes to believe that it’s reasonable to conclude popular “anger” alone will make this event any different. A lot of us have been angry for a long time. Too many… Read more »

debtsor
6 months ago

“I don’t “automatically” assume that what results from the virus will be higher taxes, increased debt, contracting employment and declining population.” I wish I had your optimism, but it’s the large number of ‘orange man bad’ voters, most of whom live off the state to begin with, that will stymie any effort the real Resistance makes to repair the finances. Its a fact of life that governments and their institutions fail from neglect and avarice, and it makes them weak. That’s where we are now, with a state that’s barely limping along, and has been taken over by progressives. The… Read more »

Tom Berman
6 months ago

This is 100% correct. JB and LL will proclaim endlessly that their budgets were balanced, bills were going to be paid and pensions were under control; everything was fine until IL and Chicago got hit with Covid-19. You are going to hear this over and over and over. They will take no responsibility or accountability for the looming financial catastrophe but will instead blame everything on Covid-19. It will be easier for them to ask for a bailout from responsible states/citizens outside of IL when they can proclaim there was nothing anyone could do and who could have possibly foreseen… Read more »

debtsor
6 months ago
Reply to  Tom Berman

Almost 100% correct. They will give lip service to the ‘blame Rauner for everything’ crowd and say that they had almost fixed Rauner’s folly.

Illinois Entrepreneur
6 months ago

I remember reading somewhere–when Rauner was governor–how the vendors of the state were actually paid-up-to date, but that crony companies had stepped in as an intermediary, paying vendors off and arbitraging the difference. In other words, as an example, the following happened: Joe’s Plumbing is waiting on payment of $20,000 for work done in January, 2019 on toilet removal in the Governor’s mansion (the real one in Springfield). The state automatically adds a penalty interest to Joe’s Plumbing invoice of 12% annually if Joe is not paid within 30 days, or something like that. So given that it took 12… Read more »

Freddy
6 months ago

I had given information about the 1% late fee after the 90 day waiting period to my local state rep a number of years ago where it went basically nowhere in some obscure committee in the abyss we call Springfield. This should have been indexed to CPI or inflation /prime rate or whatever like other states did. I also gave him info on pension management fees and the same thing happened. Went nowhere. Good thing is he tried. Check out Ballotpedia and search pension management fees. Old info but compare fees for other states. The 3% compounding should also be… Read more »

Riverbender
6 months ago

I remember reading about that myself and, if I remember correctly, Edgar was one of the investors in that organization. Edgar, so famous for the implementation of the “Edgar Ramp,” had been as bad as any Madigan Democrat IMHO and that article confirmed it in my mind.

Susan
6 months ago

I would incest on litigation financing if shown evidence that any of this is illegal (and actually happened).

joe blow
6 months ago

Governor Silver Spoon will just blame Trump when the state’s finances completely implode and his idiotic tax hike fails and the state will drop to junk status… the only solution is higher and higher middle class taxes like property, sales and vice taxes

I feel bad for anyone left holding the bag, you knew this day was coming and did nothing to prepare yourself

Indy
6 months ago
Reply to  joe blow

Amen. Those lives that will be ruined in Illinois have nobody to blame but themselves.

Rick
6 months ago
Reply to  joe blow

Silver spoon probably never changed a light bulb in his life, let alone fixed a lamp or a toaster, or made anything out of wood, or ever changed a flat. And this is the guy we are supposed trust with our lives now? The constant little-girl whinyness and blaming from this useless governor is getting tiresome, he needs to man up.

Mike Williams
6 months ago

I feel sorry for those Illinois residents that want to leave but realistically can’t for various good reasons.
I especially feel sympathy for those that consistently voted against the union loving Dems in vain. What a depressing situation, to be knowledgeable, yet stuck in a place of stupidity, ignorance, and greed.

To those Illinois residents that realistically could have left, but remain, I hope you know what you’re doing.

To those Illinois residents that did leave, refusing to bend over and take it, you have my respect.

don
6 months ago
Reply to  Mike Williams

Leave now so you can dump your house,and get some thing for it.You will not get any thing next year.

Indy
6 months ago
Reply to  Mike Williams

Those that stay in Illinois don’t know what they are doing. As a consequence their life will be ruined.

Mike Williams
6 months ago
Reply to  Indy

That’s easy to say, but many have reviewed their own personal pros and cons and often the money they earn from a job outweighs their concern for declining assets. I believe frequent commenter Debstor falls into this category.

Rick
6 months ago
Reply to  Mike Williams

Folks with houses worth over 300K or so need to downsize if they can’t leave. Expensive homes will be hit hardest first. People in McMansions with high taxes will watch their equity decline daily. But if your in a well kept but inexpensive townhome in a good neighborhood, you can probably fly under the radar of all the equity loss coming our way. You can even rent the townhome and move as an option easier than a single family home rental. Well kept and affordable will hold out good in Illinois, but McMansions or old expensive Homes in Tony burbs… Read more »

DantheMan
6 months ago

Has it really only been a month since I initially commented on the virus being the trigger for the Illinois downfall? Perhaps I finally got one prediction right.