Ilinois revenue growth fails to dent fiscal mountain
CHICAGO (Reuters) - Illinois continues to face "staggering fiscal challenges" as its unpaid bill backlog grows, despite revenue growth of 3.9 percent in the first three quarters of fiscal 2012, the state comptroller said in a report released on Monday.
Comptroller Judy Baar Topinka, in her quarterly report, said the amount of submitted and unpaid bills increased by $1.3 billion to $5.57 billion at the close of the fiscal third quarter ended in March from the preceding quarter, while payments delays were expected to persist in the foreseeable future. However, Medicaid bills not yet submitted to the comptroller and other unpaid state obligations would increase the backlog estimate at the end of March 2012 to more than $9 billion.
A big hike in income tax rates in 2011 and higher sales tax collections helped boost revenue by $886 million, or 3.9 percent, for the first three quarters of fiscal 2012, compared with the same period a year earlier. Still, Illinois continues to struggle to pay its obligations as it deals with decreased federal funding and payments to employee retirement funds, the report said.
"While tax revenues are up significantly, the falloff in federal revenues and current revenue funding of the payments to the pension systems create a situation where Illinois is essentially treading water," the report said.
April, an important revenue month given the income tax filing deadline, could help Illinois reduce its backlog should revenue come in as strongly as projected. The comptroller said the likely general funds bill backlog when the fiscal year ends on June 30 will be comparable to the nearly $3.8 billion for fiscal year 2011.
Credit rating agencies have been keeping a close eye on Illinois as it tries to tackle a huge $83 billion unfunded pension liability while its structural budget deficit continues to be fed by burgeoning unpaid bills.
Standard & Poor's Ratings Services on Friday reiterated its warning the state could face a multiple-notch downgrade in its A-plus rating if no progress is made on fiscal issues.
Governor Pat Quinn last week proposed plans to shrink spending on pensions and on Medicaid, the healthcare program for the poor.
(Reporting by Karen Pierog; Editing by Leslie Adler)