Fiscal Focus


Debt Transparency Act Fact Sheet

August 21, 2017

Debt Transparency Act: HB 3649

MOTION TO OVERRIDE

Purpose

The state’s unprecedented fiscal challenges require a full weighing of outstanding vouchers and the ramifications of the $15 billion-plus unpaid bill backlog.  House Bill 3649 seeks to provide a more accurate accounting of bills being held by each state agency and the late payment interest penalties the state is accruing. 

 

Background:

After appropriations are made and services are provided, each state agency sends bills to the Comptroller for payment. However, if vouchers for payment are held at the agency level due to a lack of appropriation or processing delays, these liabilities remain largely hidden from the Comptroller, legislators and taxpayers.

 

The state’s Prompt Payment Act, which assigns a 1% per month penalty to bills that are 90 days past due, applies to a currently unknown number of the bills being held by the agencies.

 

Current reporting requirements to the Comptroller are limited because state law only requires agencies to report on October 1 of each year the aggregate amount of bills being held on the previous June 30.  This data, which is ultimately published on the Comptroller’s website, is grossly outdated by the time it is received and does not accurately reflect the real-time situation.

 

House Bill 3649

House Bill 3649 requires, on a monthly basis, each state agency to report to the Comptroller the amount of bills being held, the liabilities for which there are appropriations, and those liabilities subject to late payment interest penalties.  These reports will be shared on the Comptroller’s website.

 

The Debt Transparency Initiative is in line with private sector best practices. The bill received strong bi-partisan support because a true accounting of the bill backlog will allow:

                     Better management of the state’s finances by anticipating future liabilities.

                     Legislators to make better policy decisions about how to tackle the growing backlog and accruing interest penalties.

                     Taxpayers to see where their money is being spent: on an estimated $900 million in late payment interest penalties last fiscal year.

 

Supporters Include:

The Office of the Comptroller

Better Government Association

The Civic Federation

Illinois Campaign for Political Reform

Taxpayers’ Federation of Illinois

Truth in Accounting

The Chicago Sun-Times

The Northwest Herald

The Belleville News-Democrat

The State Journal-Register

The Herald & Review

The Daily Herald

The Peoria Journal-Star

The Alton Telegraph

The Moline Dispatch/Rock Island Argus

The Quad City Times

The Bloomington Pantagraph

The Quincy Herald-Whig

The Rockford Register Star

The Jacksonville Journal-Courier

The Southern Illinoisan

The Joliet Herald-News

 

 

Editorial Boards are Weighing in on the Debt Transparency Act

 

Our View: General Assembly needs to override veto of Debt Transparency Act

August 19, 2017

“…It’s dumbfounding to think such a policy isn’t already in place…

This is a best practice in any thriving business. Companies know they need to have accurate, up-to-date balance sheets if they are to make smart decisions that will benefit their business…

If Illinois is ever truly going to become more fiscally sound, it needs a real-time, accurate amount of what its debts and liabilities are...

…this should transcend partisan politics. The pattern of holding bills at the agency level is nothing new: Mendoza believes agencies in former Democratic Gov. Pat Quinn’s administration did so when Republican Judy Baar Topinka was comptroller as well. It was wrong then, it’s wrong now. It cannot continue.

We encourage the General Assembly to override the governor’s veto and get this long overdue, best-practice accounting policy in place.

 

Our View: Overriding this veto is a no-brainer

October 22, 2017

[The Debt Transparency Act] should transcend the D or R after a lawmaker’s name…It’s baffling any lawmaker voted against this in the first place. State agencies currently are only required to annually report, in October, how much they owe but haven’t submitted as of June 30. Comptroller Susana Mendoza said she recently received this year’s report: One page that said $7.5 billion in bills are sitting in state agencies. It was already outdated. No one truly concerned about transparency can think the status quo on this is acceptable.

The state can’t navigate toward financial stability without having an accurate picture of what debt is on the horizon…Whoever is in charge of the state’s checkbook can’t have surprises like that. Any successful business would consider accurate balance sheets a best practice; state lawmakers serious about better serving their constituents should want that too.

The comptroller can’t keep having surprises. Monthly reports are not too much to ask for. We hope legislators overturn this veto when it comes for a vote.”

Editor: Rauner misses opportunities with veto of debt-transparency law 

August 22, 2017

“…missed opportunity was the chance to stand behind a process that would give Illinoisans more up-to-date reports of the state's financial picture

…lawmakers need a more definite picture of the state's financial status as they contemplate legislation, and taxpayers need to have that as they evaluate lawmakers and the actions of government.

The past-due balance of bills on the state's ledger is an unqualified embarrassment for everyone in state government…

No action is going to get such a huge backlog under control immediately, but no opportunity to make the process more manageable should be overlooked…

lawmakers should take it on themselves to create a more reliable and up-to-date system of accounting for the state's bills.

Editorial: Put politics aside, override governor's veto

August 22, 2017

“...this is at its heart a good-government bill that does what a fiscally responsible state ought to have been doing from the beginning.

The governor also said he is worried about the costs associated with switching to monthly reporting. We worry about the continued high cost of not doing so.

It’s time to end the practice of hiding and holding bills. We continue to believe the Debt Transparency Act will do that…“ 

Editorial: Transparency veto reasoning not acceptable

August 21, 2017

“…the Debt Transparency Act, one of the more sensible bills to come out of the House this session...
 

 Taxpayers are having to work harder than ever to pay the debt, and they deserve to know the realities of state finances down to the penny…

Lawmakers on both sides of the political fence need to do what is best for taxpayers: Demand accountability and override this veto.

Rich Miller on Springfield: If Rauner doesn’t regret this veto, he should

October 13, 2017

“State agencies under the governor's control are required to report the amount of unpaid bills they have not yet submitted to the state's comptroller for payment. The supremely goofy "Only in Illinois" part is, the agencies are required to make that report just once a year. And the information is always badly outdated by then.

To give you an idea of how ridiculous this process is, the state's bill backlog unexpectedly grew by $1 billion one day in May when the governor's Office of Management & Budget abruptly revealed the unpaid invoices.

The comptroller has to plan ahead to make the state's bond payments so she doesn't accidentally trigger a credit downgrade…make regular (and huge) state pension payments, and schools rely on their state funding to keep their doors open. So plopping $1 billion in new bills on her desk without warning can cause all sorts of very real problems.

…in yet another "Only in Illinois" quirk, state law doesn't require state agencies to tell the person who pays all the bills which invoices qualify for that [interest] penalty. So all Mendoza can do is guesstimate what is owed, and she thinks it may be nearing $1 billion.

The governor vetoed the legislation in August…It was such a transparently dishonest veto that even newspaper editorial boards that had backed Rauner at almost every turn immediately slammed him for his duplicity.