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Backlog of state debts might shrink

Published: Tuesday, Oct. 9, 2012 5:30 a.m. CDT

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SPRINGFIELD – Illinois should see its massive backlog of unpaid bills shrink modestly over the next nine months, according to an analysis released Monday, but that progress could be reversed if officials don’t address some trouble spots.

The Civic Federation’s assessment of the state budget concludes the backlog should shrink by 14 percent, to $7.6 billion.

That would still mean long delays in paying businesses, nonprofits working on the state’s behalf, insurance claims filed by public employees and more, but it’s a step in the right direction.

The federation noted some problems with the budget, however.

It assumes a $1 billion cut in Medicaid expenses, but the federation believes some of that savings may not materialize, according to the report.

Officials also included only half of the money need for employee health insurance over the 12 months beginning July 1.

If officials don’t take action, costs could rise and more bills could be added to the backlog.

More fundamentally, state leaders still haven’t found a way to slow dramatic increase in pension costs.

Pension-related payments will eat up 20 percent of the state’s general fund this year, up from 9 percent just four years ago, the Civic Federation said.

“Fixing this broken system must be the legislature’s highest priority. There is no excuse for delay,” said Laurence Msall, president of the Chicago-based group.

Gov. Pat Quinn’s office didn’t comment on the details of the new report but agreed there’s still much work to be done on the budget – especially on cutting pension expenses.

“As the governor campaigns for pension reform and attempts to negotiate less expensive contracts with state employees, he welcomes support from the Civic Federation and other civic groups with an interest in the state’s long-term financial stability,” said Abdon Pallasch, spokesman for the Democratic governor’s budget office.

The federation found that expenses for the year should be slightly less than revenues. That means the state will enjoy a surplus, if one looks only at this year’s figures.

But that picture changes when overdue bills and other old obligations are counted in the ledgers.

The federation predicted the overall deficit will be just under $4 billion, or 25 percent less than last year’s.

“This progress, while important, only begins to address the severe damage inflicted on Illinois’ finances over many years of fiscal recklessness,” Msall said.

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