November 9, 2017

Comptroller: New law will make deficit spending more transparent


The state of Illinois overspent by nearly $3 billion last fiscal year and the comptroller says the new Debt Transparency Act will help taxpayers hold government spending more accountable.

The state Senate was nearly unanimous in overriding Gov. Bruce Raunerís veto of the Debt Transparency Act Wednesday, two weeks after a unanimous override in the House. The measure changes the law to require monthly, rather than annual, bill reporting.

In Illinois' investor presentation for its recent bond offering to pay down the stateís historic bill backlog, it said approximately $2.8 billion in operational spending was not appropriated for fiscal year 2017, which ended June 30. The stateís bond offering said the $2.8 billion in unappropriated spending can still be paid from future year appropriations.

The governorís office didnít immediately respond to questions seeking an explanation on the over spending.

"We're going to continue to demand answers. The governor now has to comply with this new law," state Rep. David McSweeney, R-Barrington Hills, said. "In the meantime ... the governor needs to provide full details about when he knew about this unappropriated money, what his plan for taking care of it is, and how in the future we're going to address the overspending in the state of Illinois.

"People in this state are sick and tired of the high taxes, spending out of control," he said. "We need to continue to put the pressure on him to explain this $2.8 billion."

Comptroller Susana Mendoza said the Debt Transparency Act, which is now law, will prevent such liabilities going unchecked.

"That needs to stop, regardless of who the governor is," Mendoza said. "And when we have monthly reporting it becomes impossible for a governor to hide bills to the extent of $2.8 billion from the legislature, from the media, and certainly from the comptroller."

The Debt Transparency Act requires executive agencies to report bills, accrued interest, whether the money was appropriated, and which state government funds could be used to cover the bills.

Government finance watchdog Truth In Accountingís Bill Bergman said the measure is a good start at making government spending of tax dollars more transparent and accountable, but he said it could go further. Bergman said the law should also require the comptroller to report to the public the same information the governor would be required to report to the comptroller.

Mendoza said her office will put the information online for the public, but she will also push to make that mandatory for future comptrollers.

"If I get hit by a bus tomorrow, I hope not, but if that happens, whoever the next comptroller is will abide by the spirit and intent of the original law which is what we passed," Mendoza said.

She said to expect follow up legislation early next year to require her office to publicly post the monthly bill reports.

Mendoza said the information is important not just for taxpayers, but also for lawmakers required to balance the budget.

"So theyíre finalizing budgets in May but our most recent numbers are only accurate as of June 30th. How is that even possible to pass a balanced budget even if theyíve tried?" Mendoza said. "They canít."

The state constitution requires spending to match estimated revenues, but state lawmakers havenít finalized an official revenue estimate the past couple of years. Lawmakers also failed to pass a budget for two full years. The state didnít get one until lawmakers overrode the governorís veto of a budget and $5 billion income tax hike this summer. The governor said that budget is $1.7 billion out of balance.

Records indicate the state hasnít had a truly balanced budget for more than a decade.

As to the stateís historic backlog of unpaid bills, by this time next week most of those will be paid down, but it comes with an added debt to the taxpayersí ballooning tab incurred by the statehouse.

State government overspending reached a new milestone this week when the backlog of unpaid bills reached $16.7 billion. Mendoza said thanks to a recent $6 billion bond offering from the governorís office, $4.5 billion went out to vendors overnight.

"$2 billion of that will be spent on group health insurance payments," Mendoza said. "These are folks like dentists who have been waiting often more than two years to get paid for services already rendered."

Billions more, including matching federal dollars, will go out through early next week for a total of more than $9 billion. But the $6 billion bond debt has a 3.5 percent interest rate. Thatís on top of the 9 to 12 percent interest the state has already incurred.

"Us being able to eliminate these bills and get them off the books means weíll no longer be paying 12 percent on those bills," Mendoza said.

The recent bond offering can only be used to pay backlogged bills accrued before June 1.

Thereís still massive debt elsewhere in state government, including $130 billion and growing unfunded pension liabilities.

Illinois bond rating, because of the debt and budget dysfunction, is a notch above junk status.