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* I posted this excerpt from the legislature’s Commission on Government Forecasting and Accountability on Friday…
Incorporating June’s figures, FY 2023 finished the year with a base General Funds revenue total of $50.707 billion. This is $373 million higher than the FY 2022 base General Funds revenue total of $50.334 billion. When including the one-time reimbursement and transfers received in FY 2023 associated with pandemic-related federal dollars, the overall FY 2023 total rises to $53.134 billion, which is $2.064 billion higher than the $51.070 billion receipted in FY 2022. The FY 2023 General Funds revenue totals, in terms of both base receipts and total receipts, become the highest on record for the State of Illinois.
* Capitol News Illinois…
State revenues once again reached a record high in the fiscal year that ended June 30, creating what Gov. JB Pritzker called a “one-time” budget surplus of over $700 million.
The $50.7 billion in base general revenues that the state collected in fiscal year 2023 – which exclude one-time pandemic-related federal funds – topped last year’s previous record by $373 million.
That’s $726 million beyond what was projected by the Governor’s Office of Management and Budget in its most recent estimate adopted in May during negotiations for the fiscal year 2024 budget. […]
“The overperformance in FY 2023 revenues essentially translated into a lower than projected June 30 bills on hold at the (comptroller’s office) and higher than expected cash balances going into the new fiscal year,” Carol Knowles, a spokesperson for GOMB, said in a statement prior to the governor’s comments. “We will continue to monitor the revenue performance in FY 2024 as the national economy continues to have mixed economic projections.”
* The governor was asked about the surplus on Friday…
Well, it’s always good to have a surplus. And that’s something that we’ve done consistently now for four years.
I would add that much of the surplus that we saw that came in at the end of the year is one-time dollars that were added to our revenues. So that’s not something that you can program in year after year to spend money on. You have to spend one-time dollars on one-time things at least if you want to continue to balance the budget of our state, which again, I’m very committed to and we’ve been doing every year since I took office. So obviously better to have a surplus. In fact it’s the it’s the first real significant surplus that we have had because we’ve taken all the surpluses in the previous years and assigned them to those one-time expenditures. This is a kind of an unexpected additional amount of money.
We’re going to try to apply it to things like paying down debt, the things that we’ve been doing, paying down debt, making sure that we’re lowering the number of unpaid bills. It’s almost impossible now, I should tell you, for us to provide more money to pay off bills. We’re down to paying bills in about three, four or five days. You would almost argue that that’s too fast. We could be earning interest on the money, and wouldn’t be paying interest on that if you just extended it for a few more days.
But meanwhile, I think we should all celebrate the fact that Illinois is in such good fiscal shape in terms of our annual operating budget, that we’re able to pay bills on time and faster than ever before. [Emphasis added.]
It’s an interesting point and a pretty good problem to have. Your thoughts?
…Adding… I posted this in comments, but I’m gonna bump it up because I think there’s another point to be made here…
My own argument would be to start gradually moving back to a normal business cycle of a 30-day payment window before the economy forces the state to do so all at once, and maybe even beyond that.
posted by Rich Miller
Monday, Jul 10, 23 @ 9:12 am
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On the one hand, it is drops in a bucket. On the other hand, it is more than zero, and every drop adds up over time. No particularly strong opinion either way. This won’t be the deciding factor for me when I vote for a comptroller.
Comment by Homebody Monday, Jul 10, 23 @ 9:14 am
Homebody summed it up perfectly. Would be interesting to see what the actual impact would be vs. the goodwill generated by being hyper-responsive
Comment by Sox Fan Monday, Jul 10, 23 @ 9:18 am
===vs. the goodwill generated by being hyper-responsive ===
My own argument would be to start gradually moving back to a normal business cycle of a 30-day payment window before the economy forces the state to do so all at once, and maybe even beyond that.
Comment by Rich Miller Monday, Jul 10, 23 @ 9:21 am
Paying as slowly as makes economic sense is good business re: some vendors, but the nonprofits to whom the state has outsourced the safety net already struggle this time of year (increased demand for summer programs/fiscal year changeover) and need money as fast as it can come.
Comment by Stephanie Kollmann Monday, Jul 10, 23 @ 9:22 am
Eh. Seems like a loan from the people the state owns money too. Waiting a few weeks more isn’t going to tank a business, but I’m not sure it’s where we want to go.
Comment by Perrid Monday, Jul 10, 23 @ 9:22 am
Call me paranoid… I pay every bill the moment I can. Seems like the best practice.
Comment by Ducky LaMoore Monday, Jul 10, 23 @ 9:29 am
When interest rates were .05%, it probably didn’t matter too much, but now that rates are around 4% for a good interest bearing account, that becomes real money. From a fiscal standpoint, I think it’s a great idea to wait another week before paying a bill.
Comment by Steve Rogers Monday, Jul 10, 23 @ 9:32 am
Yes, it’s a loan of sorts, but at contractually-agreed terms. 0% if received within X days, Y% after. The danger is that paying slowly can 1) compromise state services and functions (unlikely with a vendor like ComEd, likely with smaller vendors) or 2) result in vendors raising prices or adjusting contract terms to compensate (unlikely with smaller delays and areas in which the state has negotiating advantage)
Paying early, or even timely, is not necessarily a business virtue. That said, the state is still trying to rehab its rep during the broadly destructive Rauner years. And there are sectors that still struggle.
Comment by Stephanie Kollmann Monday, Jul 10, 23 @ 9:33 am
Net 30 is reasonable and appropriate. It USED to be standard practice, not so much anymore but the state should not go beyond 30 days.
Comment by JS Mill Monday, Jul 10, 23 @ 9:34 am
good point from Gov on waiting a bit. if there is a standard practice, go with that. on this and other things. always keep to standards.
Comment by Amalia Monday, Jul 10, 23 @ 9:47 am
I’d like to see the math on this one, though after the Rauner years I figure most people getting state money are rugged enough to survive waiting an extra few days for the check.
Comment by Arsenal Monday, Jul 10, 23 @ 9:53 am
At one point, the Feds paid at 21 days. However, think that was established when checks were printed & mailed (Feds have vendors all over).
As to 30 days, is InBev still 120 days? When they bought out AB, vendors were told payment cycle was 120 days.
Comment by Anyone Remember Monday, Jul 10, 23 @ 9:53 am
Pay the bills. State vouchers should not be used in this manner.
Comment by Dirty Red Monday, Jul 10, 23 @ 9:54 am
Imagine how much money could be made if we just waited 6 months. S/
Comment by Bruce( no not him) Monday, Jul 10, 23 @ 10:00 am
I’m with Ducky LaMoore, never have liked the idea of owing money.
Have yet to have a loan; mortgage, car, other, that didn’t get paid off early.
Comment by Flyin'Elvis'-Utah Chapter Monday, Jul 10, 23 @ 10:09 am
Is it me or does everything jb touch seem to turn to gold these days?
Comment by Jilted Monday, Jul 10, 23 @ 10:29 am
Most Medicaid payments go to the insurance companies–so if the state waits 30 days to pay the MCOs, then there needs to be assurances that the MCOs move the money timely. Historically, that has not been the case. However, if the MCOs are currently making interest from quick pay practices, then the Governor has a good point.
Comment by ANON Monday, Jul 10, 23 @ 10:54 am
I also pay promptly, but that is with my own money. At 5 percent interest, 100 million earns $13,698.63 per day.
Comment by very old soil Monday, Jul 10, 23 @ 10:54 am
I pay my bills two-three days before they are due. Always have. Not making lots of extra money, but it’s not nothing.
Comment by Pot calling kettle Monday, Jul 10, 23 @ 10:55 am
Don’t forget the time it takes for the Agency to process on their end and then the time it takes the IOC to process before the payment is put in line. When you factor those in it is probably 30+ days by the time the actual payment is issued.
Comment by CFO Monday, Jul 10, 23 @ 11:04 am
30 day payment makes sense. I do that based on my bills before the EFT and this generates a fair amount of interest for me each month. I can’t fathom the amount of money the state could earn if the balance remains high before disbursement occurs. What it would generate is REAL money that could be used to benefit the citizens.
Comment by illinifan Monday, Jul 10, 23 @ 11:13 am
===Is it me ===
It’s you.
For instance: https://capitolfax.com/2023/07/10/the-system-is-still-failing/
Another one coming later today.
Comment by Rich Miller Monday, Jul 10, 23 @ 11:15 am
I’ve been saying this all along. In my industry net 45 is standard and most of our large customers struggle meeting that. There’s no reason for a large organization to pay bills this quickly.
Comment by Excitable Boy Monday, Jul 10, 23 @ 11:25 am
Payments should be made timely for these reasons from my perspective as an Agency CFO
- many programs are federally funded and measured with incentives based on performance; often, one of these are timeliness of payment
- it is good for our credit ratings as a short backlog is always impressive; and Illinois needs this now
- it saves money with customers by creating goodwill; for example, the bids on completing tasks like garbage and electric went up over 50% in the bids after Rauner decided to do a State Fair but not pay; costs come down when entities know they will get their money timely
- in private business, retaining money for investment makes sense but in government it can be detrimental as you are depriving the private entities time to invest; I prefer my Illinois to grow with people having the money and spending/reinvesting
Comment by Lurker Monday, Jul 10, 23 @ 12:28 pm
No one is suggesting that payments not be made in a timely manner.
Most of the business world allows 30 days for payment. That is considered timely.
There’s nothing wrong with receiving a net-30 bill and waiting until day 25 to pay it. I do that all of the time. I’d rather earn interest on my money. The state should do the same.
Comment by Steve Rogers Monday, Jul 10, 23 @ 1:10 pm
How many businesses would give the state a discount if it paid early? I’m thinking back to the good ol’ days of two ten net 30. All those 2% discounts would add up on top of moving payments from 5 days to 10 days.
Comment by Hump Day Harry Monday, Jul 10, 23 @ 1:43 pm
Never pay until THEY start charging interest. If you are paying interest pay off as quickly as possible unless the rate you are paying is lower than the rate you are getting.
Just good sense.
Comment by unafraid Monday, Jul 10, 23 @ 1:54 pm
I don’t think some of you understand how the state’s payments work when you are referring to “net 30″ etc. Those “terms” mean nothing to the state. The state doesn’t pay the interest listed on invoices that say “net X” and interest accrues after that date. The state is not responsible for interest until a bill is 90 days past due and then it is at the statutory rate.
Comment by Demoralized Monday, Jul 10, 23 @ 3:59 pm
How long a bill is at the Comptroller is only a piece of how long vendors wait for payment. It often takes 5-10 business days ,at best, for bills to make their way through the agency’s internal approvals. So when you account for that the State is already taking at closer to 15 business days (20 calendar days).
If the State wants to earn more interest on its cash they need to do so by continuing to grow the Budget Stabilization Fund, rather than adding needless delays to paying vendors.
Comment by Anon123 Tuesday, Jul 11, 23 @ 11:22 am