Legislation spearheaded by State Rep. David McSweeney (R-Barrington Hills) requiring the State to detail how much money is wasted as a result of the State not paying its bills on time has been signed into law.
State law requires the State to pay interest on bills that are over 90 days late at a 12 percent annualized rate and even sooner for certain medical bills. Illinois’ first-ever Debt Transparency Report showed that taxpayers are on the hook for about $1 billion in late payment interest penalties as of last December.
“A billion dollars is going down the drain instead of being used to pay for vital services,” Rep. McSweeney said. “That is unacceptable. We need to curb these payments. This legislation will help us do just that.”
Beginning with Fiscal Year 2019, House Bill 5814 requires the Governor’s budget to include an estimate of late payment interest penalties for the fiscal year. The Governor's Office of Management and Budget must also compile in their annual report an estimate of all the late interest payment projections for the following four fiscal years. The legislation further provides that late interest payments will not be paid if a Chief Procurement Officer has voided the underlying contract or if the Auditor General is conducting an audit and the State Comptroller is holding the contract for review.
“Our state budget is out of control and the money that is squandered on interest is an ever growing part of that,” McSweeney said. “If more legislators understood the enormous consequences of overspending, we might be able to rein it in and get better results for Illinois taxpayers.”
The new law is intended to help the State get a better accounting of late payment interest penalties and was crafted with the State Comptroller’s office, the constitutional office that handles the State’s bills. The bipartisan bill was shepherded through the Senate by Senator Tom Cullerton (D-Villa Park). It passed both the House and Senate unanimously.