Illinois’ Backlog of Bills Reduced to a Normal Payment Schedule

May 19, 2023

Governor Pritzker’s FY2024 budget touted significant reductions to the State’s bill backlog over the last several years, emphasizing that the State is on a normal payment schedule. This blog post provides a brief explanation of how the State has reduced the bill backlog from a historic high of $16.7 billion in 2017 to under $1 billion as of April 2023.

Historically, Illinois has dealt with budgetary shortfalls by delaying payments to vendors, school districts, local government and universities, which resulted in billions of dollars in unpaid bills at the end of each fiscal year. The bill backlog often led the State to begin fiscal years with a deficit and use revenues from the current year to pay off the previous year’s bills—thus reducing the amount of revenues available for current year spending.

Reduction of Bill Backlog

The Illinois State Comptroller reported that the State’s accounts payable totaled $962 million as of April 30, 2023 for General Funds and the Health Insurance Reserve Fund, which is significantly less than the peak of $16.7 billion during the FY2015-FY2017 budget impasse. According to the Comptroller, the State is on a normal payment schedule and bills in process are currently less than 30 days old. The Governor’s Office of Management and Budget estimated in February 2023 that the FY2024 year-end accounts payable will be maintained at $963 million. The reduction in outstanding bills has reduced State spending on late-payment interest penalties by $290 million per year on average. In 2022 the State paid $35 million in interest penalties, compared to almost $1.2 billion paid between 2016 and 2017 due to the budget impasse.

After the backlog of unpaid bills peaked at $16.7 billion on November 8, 2017, the State addressed the situation through several actions. First, the State issued $6 billion in General Obligation bonds to pay bills incurred before July 1, 2017. The bond sale allowed the State to receive $6.5 billion in proceeds, which it used to pay down the unpaid bill backlog, primarily for group health insurance and Medicaid bills. The bond sale was authorized by Public Act 100-0023, enacted on July 6, 2017. The outstanding principal on the General Obligation bonds is $3.5 billion as of December 31, 2022.

Additionally, the State used some of the $3.2 billion in funds borrowed from the Municipal Liquidity Facility due to the pandemic revenue losses in FY2020 and FY2021 to manage prior year’s bills and pay down the Medicaid bill backlog. The State paid off these funds in their entirety nearly two years ahead of schedule in January 2022, which saved taxpayers an estimated $82 million in interest costs.

Lastly, the State managed unpaid bills by investing in its own backlogged debt using money from other State funds with sufficient liquidity. The law gives the Illinois Treasurer the authority to invest up to $2 billion with the Comptroller, who uses the funds to pay off pending unpaid bills and avoid high-interest penalties. The remaining $405 million of this program was paid off during FY2021.

Normal Payment Bill Schedule

The current and projected accounts payable amounts are a major improvement from the large backlog of bills in previous years and represents a normal bill payment schedule. The Civic Federation supports the State reducing its bill payment cycle to a normal schedule, as highlighted in the Federation’s analysis of the State of Illinois FY2024 Budget released on May 11, 2023.