Swordsmyth
03-16-2018, 04:34 PM
You probably know Illinois has a huge backlog of unpaid bills - $8.7 billion as of yesterday. The state pays hefty late payment penalties on most of those bills. Through the first seven months of this fiscal year, the State spent $337.9 million on interest penalties, according to The Civic Federation (https://www.civicfed.org/iifs/blog/illinois%E2%80%99-spending-late-payment-interest-penalties-climbs-after-bond-sale).
But you may not know that the Illinois Treasure sits, indefinitely and inexplicably, on roughly $11 to $15 billion of state money (not college savings account money or funds held on behalf of municipalities), mostly in near-cash short term investments. We’ve written often (http://www.wirepoints.com/12-billion-sits-unused-with-illinois-treasurer-why-wp-original/) about the mystery behind that. Today, that balance (http://www.illinoistreasurer.gov/Office_of_the_Treasurer/State_Investments/State_Portfolio) is $15.3 billion.
Well, a bill pending in the Illinois Senate would authorize the Treasurer to use that cash to buy invoices owed by the state.
It’s Senate Bill 2858 (http://www.ilga.gov/legislation/BillStatus.asp?DocTypeID=SB&DocNum=2858&GAID=14&SessionID=91&LegID=110035) and it raises all sorts of questions. For starters:
How much of his money would the Treasurer use for this? It’s the last money we have in the piggy bank, and the state ought to be extremely careful about how it’s used. The bill would exempt only money set aside for bond payments, which isn’t very much of what the Treasurer holds (less than $2 billion, I believe, based on data I got through a FOIA request a couple years ago).
Why give the Treasurer sole authority to decide how much of this money to use for this purpose? Treasurer Micheal Frerichs, in my opinion, is among the last people we should give that authority to. See our earlier articles (http://www.wirepoints.com/illinois-treasurer-shoots-self-in-head-defending-activist-social-investing-wirepoints-original/) about his grandstanding and playing activist social justice investor with our money.
Whose receivables would the Treasurer buy? Political friendlies? Those he deems most worthy? Would he buy them at a discount?
Why not just use the money to pay the bills directly? The accrual of late payment fees would be lower on what the Treasurer would buy under the proposed law, but why is that better than direct payment? The whole concept of buying your own invoices is like a dog chasing his tail.
I emailed the bill’s sponsor, Sen. Heather Steans (D-Chicago), for some answers but got no response. The bill appears to be serious, having gone through committee and set for a second reading (http://www.ilga.gov/legislation/BillStatus.asp?DocTypeID=SB&DocNum=2858&GAID=14&SessionID=91&LegID=110035).
Currently, the state lets certain companies buy the invoices owed to vendors under the Vendor Assistance Program. Those companies pay the vendor upfront then pocket the payment that comes from the state together with any interest or penalties.
That program has been criticized because the companies doing the purchasing have had political connections. Former Governor Jim Edgar, according to the Chicago Sun-Times (https://chicago.suntimes.com/news/watchdogs-ex-gov-jim-edgar-aims-to-cash-in-on-states-cash-woes/), was “cashing in” this way, serving as chairman of one such company. Other companies doing most of the purchasing, according to the Sun-Times, include one founded by Madigan aide-turned-lobbyist Brian Hynes and Patti Solis Doyle, a former campaign manager for Hillary Clinton whose brother is Ald. Danny Solis (25th).
The bill would make the Treasurer a qualified purchaser under that Vendor Payment Program.
Currently (http://www.illinoistreasurer.gov/Office_of_the_Treasurer/State_Investments/State_Portfolio), the Treasurer’s $15.3 billion is earning just 1.5% per year, being in investments with an average duration of just under a year.
Maybe there’s some sense to using some of the Treasurer money for this purpose, but the questions I’ve listed and more need to be answered thoroughly and the program would have to be strictly controlled with far more detail than is in the current bill.
More at: https://www.zerohedge.com/news/2018-03-16/illinois-passes-dog-chasing-its-tail-legislation-buy-receivables-owed-state
But you may not know that the Illinois Treasure sits, indefinitely and inexplicably, on roughly $11 to $15 billion of state money (not college savings account money or funds held on behalf of municipalities), mostly in near-cash short term investments. We’ve written often (http://www.wirepoints.com/12-billion-sits-unused-with-illinois-treasurer-why-wp-original/) about the mystery behind that. Today, that balance (http://www.illinoistreasurer.gov/Office_of_the_Treasurer/State_Investments/State_Portfolio) is $15.3 billion.
Well, a bill pending in the Illinois Senate would authorize the Treasurer to use that cash to buy invoices owed by the state.
It’s Senate Bill 2858 (http://www.ilga.gov/legislation/BillStatus.asp?DocTypeID=SB&DocNum=2858&GAID=14&SessionID=91&LegID=110035) and it raises all sorts of questions. For starters:
How much of his money would the Treasurer use for this? It’s the last money we have in the piggy bank, and the state ought to be extremely careful about how it’s used. The bill would exempt only money set aside for bond payments, which isn’t very much of what the Treasurer holds (less than $2 billion, I believe, based on data I got through a FOIA request a couple years ago).
Why give the Treasurer sole authority to decide how much of this money to use for this purpose? Treasurer Micheal Frerichs, in my opinion, is among the last people we should give that authority to. See our earlier articles (http://www.wirepoints.com/illinois-treasurer-shoots-self-in-head-defending-activist-social-investing-wirepoints-original/) about his grandstanding and playing activist social justice investor with our money.
Whose receivables would the Treasurer buy? Political friendlies? Those he deems most worthy? Would he buy them at a discount?
Why not just use the money to pay the bills directly? The accrual of late payment fees would be lower on what the Treasurer would buy under the proposed law, but why is that better than direct payment? The whole concept of buying your own invoices is like a dog chasing his tail.
I emailed the bill’s sponsor, Sen. Heather Steans (D-Chicago), for some answers but got no response. The bill appears to be serious, having gone through committee and set for a second reading (http://www.ilga.gov/legislation/BillStatus.asp?DocTypeID=SB&DocNum=2858&GAID=14&SessionID=91&LegID=110035).
Currently, the state lets certain companies buy the invoices owed to vendors under the Vendor Assistance Program. Those companies pay the vendor upfront then pocket the payment that comes from the state together with any interest or penalties.
That program has been criticized because the companies doing the purchasing have had political connections. Former Governor Jim Edgar, according to the Chicago Sun-Times (https://chicago.suntimes.com/news/watchdogs-ex-gov-jim-edgar-aims-to-cash-in-on-states-cash-woes/), was “cashing in” this way, serving as chairman of one such company. Other companies doing most of the purchasing, according to the Sun-Times, include one founded by Madigan aide-turned-lobbyist Brian Hynes and Patti Solis Doyle, a former campaign manager for Hillary Clinton whose brother is Ald. Danny Solis (25th).
The bill would make the Treasurer a qualified purchaser under that Vendor Payment Program.
Currently (http://www.illinoistreasurer.gov/Office_of_the_Treasurer/State_Investments/State_Portfolio), the Treasurer’s $15.3 billion is earning just 1.5% per year, being in investments with an average duration of just under a year.
Maybe there’s some sense to using some of the Treasurer money for this purpose, but the questions I’ve listed and more need to be answered thoroughly and the program would have to be strictly controlled with far more detail than is in the current bill.
More at: https://www.zerohedge.com/news/2018-03-16/illinois-passes-dog-chasing-its-tail-legislation-buy-receivables-owed-state