Ill. sets record for failing finances in 2010

SPRINGFIELD -- The last budget year was a record-breaking one for Illinois finances, and all the records were bad.

Comptroller Dan Hynes' office on Wednesday issued its final report for the 2010 fiscal year that ended June 30. Among its findings:

• The adjusted year-end General Revenue Fund balance was a negative $4.69 billion a record.

• The backlog of unpaid bills on June 30 was $4.7 billion a record.

• Because of the state's financial condition, the amount of time it takes the comptroller's office to pay bills once they arrive in the office is 153 working days a record.

"Illinois ended the year in the worst fiscal position in its history," the report concludes.

In fact, things are so bad, the state can't even afford to replenish its "rainy day" fund.

"Given the size of the state's bill backlog, the office believes it was more important to try and (reduce) unpaid bills," said Hynes spokeswoman Carol Knowles. "It's more than rainy, it's a monsoon."

The report covers the litany of revenue failures that have been part of the state's financial meltdown for months. For the year, Hynes' office said, corporate income tax receipts were down by more than 20 percent, sales tax receipts fell nearly 7 percent, and income taxes dropped by nearly 8 percent. Together, income from those taxes, all of which are closely tied to the economy, dropped by more than $1.5 billion.

The picture probably will get worse, according to the comptroller's office, even with "reasonable economic revenue performance" and Gov. Pat Quinn using the extra budget powers granted him by the General Assembly.

"Absent any significant changes to the current budget plan either through reserves, (spending) reductions, pension bonding or major revenue enhancements, the state will likely end fiscal year 2011 with a GRF bill backlog significantly higher than that at the end of fiscal year 2010," the report says.

Normally, bills keep coming into the state for weeks after the fiscal year ends, even though they were run up during the fiscal year. The state usually has until the end of August to pay those bills.

This year, though, the General Assembly extended that deadline until Dec. 30. The report notes there is almost no way the state could pay all of those bills by the end of August.

But even getting them all paid by the end of the calendar year could be tricky.

The report says several things have to happen for the state to be able to pay all of its bills by then, including borrowing $1.3 billion over the short term to make up for "revenue failure," borrowing against money the state is scheduled to receive in the future from the national tobacco settlement, and borrowing money from restricted state accounts to use for other bills.

Quinn's budget office said it plans to borrow the $1.3 billion for failure of revenue later this month. However, spokeswoman Kelly Kraft said it will probably be October before details of borrowing against the tobacco settlement can be completed.

The administration is reviewing which restricted state funds have excess money that can be tapped for other expenses, a process that could take several more weeks, she said.

Another of the budget powers granted to Quinn is to hold spending in an emergency reserve, essentially another level of cuts beyond what Quinn identified last week when he signed the new budget. The administration plans to hold nearly $900 million in emergency reserve. Kraft said Wednesday that details of those reserves are still being worked out.