The state of Illinois has taken another step toward improving its financial situation — selling bonds to help pay down the backlog of overdue bills.
Because Illinois went two years without a budget, it’s piled up nearly $16 billion in unpaid bills. That money is owed to hospitals, electric utilities, drug rehab centers — basically anyone who has a contract with state government.
The thing is, there are late-payment penalties on a lot of that debt — in some cases, up to 12 percent a year. So, it makes sense to effectively refinance.
Hence the bond sale. Illinois managed to get an interest rate of three and a half percent.
That’s pretty high compared to other states, but Illinois has to pay more because it has the lowest credit rating in the country. Analysts have blamed that on a “dysfunctional” government.
