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Tue, 24 May 2016
Money is Fungible -- Except in Illinois
Money is fungible. My one dollar bill is the same as yours. It’s the basis of our banking system. And it’s true everywhere in the United States. But it’s not exactly true in Illinois. Because Illinois has Fiscal Year 2016 dollars. And beginning on July 1, Illinois will have Fiscal Year 2017 dollars. But they aren’t equal. They cannot be used interchangeably to pay bills. And that is a dark cloud hanging over the heads of the Pay Now Illinois Coalition members who are owed more than $100 million for services performed under contracts since the start of the current Fiscal Year on July 1, 2015. Once the fiscal year ends, those FY2016 dollars can’t be tapped again. They are gone. Old work needs to be paid with old money. With June 30 approaching, that old money is slipping away. It exists on paper, but it can’t be accessed without going through the Court of Claims, additional appropriations, more budget impasses, mind boggling delays and continuing state politics. And even then, those owed Fiscal year 2016 money are unlikely to get paid in full. Which is why the plaintiffs filed suit against the Governor and several department heads. To get paid in full now. The goal of the suit, which claims breach of contract among other things, seeks payment to avoid the bureaucratic and time intensive Court of Claims process. If the state can’t reach the fiscal year 2016 budget in 2016, does anyone really think they will be able to reach a Fiscal Year 2017 agreement? And that leads to the next big question – will there be new money for new work? Who suffers? According to this investment banker in an interview with Bloomberg Business News, everyone in the state: “Bondholders pay attention to distress in social services for the borrower,” said Adam Buchanan, senior vice president of sales and trading at Ziegler, a broker-dealer in Chicago. “It’s a signal of weakness of potentially greater problems in the future.” “Potentially greater problems in the future” – can it get any more ominous? In the meantime, business continues as usual in Springfield with two intractable sides and no results. No movement. No budget. And the stack of unpaid bills gets higher.
Posted 18:05

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