CHICAGO – Today Governor Rod R. Blagojevich announced that thanks to a successful short-term borrowing deal, the State has $1.4 billion available to pay many community organizations and vendors that have supplied goods and services to the state, but have yet to be paid. Because Illinois has a $2 billion budget deficit caused by the national recession and an uneven revenue stream, the State sold $1.4 billion in general obligation certificates to infuse the General Revenue Fund with much needed cash to pay vendors and providers who urgently need payment.
“I am pleased to announce that the State will be able to pay many community organizations that have provided goods and services to Illinoisans and need to be paid. For example, without urgent payment from this borrowing, many providers who care for Illinois’ seniors would have to turn seniors away. When the State doesn’t pay its vendors, those vendors struggle to pay their employees. Thanks to the short-term borrowing deal completed today, we have $1.4 billion available to pay many of these organizations,” Governor Blagojevich said.
Statewide, community organizations have been waiting for payment by the State. These organizations have provided services like health care, child care and senior home care and goods like food for state veterans homes and prisons. Several senior organizations have contacted the State to convey that if the short-term borrowing did not go through and they were not paid, they would no longer be able to provide these services.
“The money that is being made available by the state will provide direct assistance to those who desperately need it. Without this support, many community organizations would no longer be able to provide critical services to Illinoisans during a time when it is needed the most,” commented Pat Comstock, executive director of Healthcare Council of Illinois, which represents long-term care facilities throughout the state. “The great thing about this is providers of all types – hospitals, nursing homes, home service providers and those that serve children and the homeless – will get help.”
The Office of the Governor, the Office of the Comptroller, the Office of the Treasurer, and the Office of the Attorney General have worked together on this short-term borrowing transaction which would immediately put cash into the State’s accounts so that the Comptroller can pay bills more quickly.
In addition to the state receiving less revenue than the budget projected, the state also has an uneven cash flow. This means that more dollars will come into the state during March, April and May. The short-term borrowing will allow the state to pay many bills now that have been pending, rather than waiting for this spring when additional money comes in. While short-term borrowing will not solve the budget deficit, the State needs to pay vendors and manage the uneven cash flow.
In May 2003, the state borrowed $1.5 billion to pay Medicaid assistance, medical providers of long term care, the refund fund, and state aid payments to K-12 schools. Short-term borrowing has been used in other years since to manage cash flow and ensure the state’s payment obligations are met in a timely manner.
Illinois is not alone in facing a FY09 budget shortfall due to lower than projected revenues. At a recent meeting with President-Elect Barack Obama and the nation’s governors, Chairman of the National Governors Association, Governor Ed Rendell of Pennsylvania, said 43 of 50 states currently face budget deficits.