Illinois reports paying its bills on time and in full

The Illinois state comptroller reported a 55% year-over-year increase in the end-of-year general revenue fund cash balance as her office paid the state's bills in a timely manner, a departure from recent years when the state's unpaid bill backlogs topped $10 billion.

Illinois ended the fiscal year with a $1.7 billion balance in the general revenue fund, up from last year's $1.1 billion, said State Comptroller Susana Mendoza.

That stands in stark contrast to roughly a decade ago, when a backlog of $8.5 billion in unpaid bills had then-Comptroller Leslie Geissler Munger warning of a "recipe for disaster." Or to 2016, when Illinois was facing down a $10 billion to $12 billion backlog, which surpassed the record $9.9 billion backlog in 2012. 

Illinois State Comptroller's office

When Mendoza took office in late 2016, she inherited a $15 billion backlog of unpaid bills. That would ultimately rise to rise to $16.7 billion in 2017 before dropping steadily during the administration of Gov. J.B. Pritzker, who took office in 2019, replacing Bruce Rauner, a Republican whose budget wars with the Democrats who led the state legislature left the state without an enacted budget for two years.

By last year, the state had closed out the fiscal year with a $1 billion general revenue fund balance and increased the rainy-day fund balance to $1.94 billion.

The rainy-day fund is now projected to reach $2.3 billion by June 2025, according to Mendoza's office. 

"It's dramatic, and it's been a priority of the administration, the General Assembly and our office to build that up," said Abdon Pallasch, spokesperson for the comptroller. "It's something that the rating agencies have mentioned when they're evaluating Illinois bonds, they'd like to see a better rainy day fund. And they've been noting the progress."

Moody's Ratings in April revised the state's outlook to positive from stable and assigned a rating of A3 to the state's new GOs. S&P Global Ratings assigns an A-minus long-term rating to the state's GO bonds, a BBB-plus rating on its appropriation-backed debt and a BBB-minus on the state's moral obligation debt; the outlook is stable. 

Fitch Ratings assigns an A-minus long-term rating with a stable outlook to the state's general obligation unlimited tax debt and GO bonds. Kroll Bond Rating Agency rates the state's Build Illinois Bonds AA-plus with a stable outlook. 

The state is only three years removed from having triple-B-minus ratings across the board.

"The state's progress in improving its structural budget alignment, paying down liabilities and building its budgetary reserves all place it on a positive credit trajectory, but the stable rating outlook continues to reflect our view that there remain meaningful upside constraints that keep it separate from more highly rated states," S&P director Scott Nees said in an April statement.

The state pension systems remain underfunded, and a proposed change by Pritzker's administration to raise funding levels from the current statute's requirement of 90% to the actuarially-recommended 100% failed to make it into the final fiscal 2025 budget.

Mendoza has pushed to make extra payments into the state pension systems and the rainy-day fund. She now says she plans to take advantage of a new law permitting the comptroller's office to pre-pay the required monthly pension payments.

The provision, proposed by Mendoza, was included in the budget implementation bill passed by the General Assembly and signed into law by Pritzker last month. Previously, the law did not permit additional payments to the pension systems beyond the set monthly payments required by statute. The comptroller is now able to make additional payments.

"This will enable the [retirement] systems to plan accordingly and keep more of the pension funds in their investment portfolios," Mendoza said in a statement.

"With the pensions, every little bit helps, and when they're not having to wait until the last minute, that means they don't have to disrupt the investments they have going that get good returns," said Pallasch. "It gives them the ability to plan… This helps combat the pension shortfall, so even less repair is needed going forward."

Mendoza "would like to see even more," Pallasch said. She's proposed a bill that would trigger a 1% automatic monthly transfer into the state's budget stabilization fund and pension stabilization fund when Illinois' revenue growth is 4% or greater and the state's bill backlog is under $3 billion. 

The last version of that legislation, House Bill 2515, never made it out of the Rules Committee.

Mendoza noted in a statement that the state generated 53% more in interest income than last fiscal year by keeping a healthy cash balance throughout 2024. It's a far cry from the days when the state government accumulated interest costs on its unpaid bills.