Illinois fix to unpaid bills may end up as financial time bombCHICAGO (Reuters) - Illinois owes a handful of financial consortia more than $118 million under an obscure program intended to speed up overdue payments to the cash-strapped state’s vendors, an analysis of state records shows. Political feuding between Republican Governor Bruce Rauner and Democrats who control the legislature has kept Illinois without a full operating budget since July 2015, contributing to a doubling of the unpaid bills backlog. The amount of overdue bills could reach $13.5 billion, or 40 percent of available operating revenue, when the current fiscal year ends June 30, the Rauner administration has projected.  Come fiscal 2022, the backlog is projected to balloon to $47 billion. No other U.S. state defers payments to the extent Illinois does to manage cash flow, credit-rating analysts said. The one-of-its-kind, bill-payment program seeks to avert the nightmare scenario for a state in the worst financial shape in the country: a shutdown of essential services such as employee health insurance, a disruption of prison food supplies or mothballing of state trooper cars in need of fuel and maintenance. “I don’t think there is any other alternative for us,” Illinois Central Management Services Director Michael Hoffman told a legislative panel in May. But it comes at a heavy cost with unlimited late-payment fees now approaching 20 percent in some cases for Illinois’ cash-strapped government, whose general obligation (GO) low-investment grade credit ratings are the lowest among U.S. states.  The state’s negative credit outlook means its $26 billion of outstanding GO bonds could lurch closer to the junk level if the growing unpaid bill pile impairs its ability to provide essential services, affects debt payments and inflates its already huge $130 billion unfunded pension liability.     “No other state or business would operate by incurring obligations to its vendors and setting up a third-party payment structure that dramatically inflates the costs of those services,” said Laurence Msall, president of the Chicago-based Civic Federation, a non-partisan government watchdog.  Under the Vendor Support Initiative (VSI) program launched last year to replace a similar plan introduced in 2011, state vendors can get paid without delay 90 percent of what they are owed by state-designated financial lenders.  When the state finally pays, the vendors get the final 10 percent, while the lenders keep the late-penalty fees. In Illinois, receivables more than 90 days past due accumulate interest at a rate of 1 percent per month. For the lenders, the risk is that the state will not pay up and they will need to fight for compensation in courts, but that has not happened yet. The firms include financial institutions such as Citibank N.A. (C.N) and Bank of America Corp (BAC.N), a distressed debt investor tied to a Rauner campaign donor, and political insiders, including Hillary Clinton’s 2008 campaign manager and a former two-term Republican Illinois governor. Lindsay Trittipoe, majority investor of the second-largest consortium, Illinois Financing Partners LLP, told Reuters his group was performing a vital function rather than exploiting the state’s financial miseries. “Our money is flowing into the market, helping the wheels of commerce to keep working,” he said. Citi and Bank of America declined to comment for this story and representatives from the largest state-qualified buyer of receivables, Chicago-based Vendor Assistance Program, and some of its investors did not respond to interview requests. Fees on unpaid bills in the program have been growing by more than $2.6 million per week and could exceed $194 million by June 30, according to a Reuters analysis of state data as of Sept. 28. By the end of Rauner's term in January 2019, total interest on unpaid receivables in the program could exceed $351 million if there is no progress in reducing the bill backlog, Reuters calculations show. (Graphic: tmsnrt.rs/2fW1vxj) That total represents more than what Illinois allocated in operating funds last June to keep seven of its nine public universities open for six months.  As of late September, four participating VSI lenders had bought 15,369 unpaid receivables worth $1.12 billion under the program. Late-payment penalties on those billings surpassed $118 million and continue to grow, Reuters has found. Illinois law places no limit on how long the late fees can accrue and since 2010 the state has spent about $929 million in late-payment penalties, according to state comptroller data. Three of the four firms now involved also took part in a similar program launched under previous Democratic Governor Pat Quinn. Its current version has sparked questions over how firms were vetted, a lack of up-to-date disclosures about their owners and financing, and patchy accounting of vendor payments. Additionally, state business registration of one of the firms, Payplant LLC, expired two months before the program’s launch, according to the Illinois secretary of state’s office. A company representative blamed “a procedural lapse” and said it had begun the process in October to reinstate its LLC status. “The focus should be on transparency,” said Illinois Treasurer Michael Frerichs, a Democrat. “If we have a program like this, we don’t want to turn it over to loan sharks.” Using the state data, Reuters calculated the average rate on late payments at 8.14 percent through late September. During that same period, the Dow Jones Industrial Average only gained 3.65 percent. “It seems that (it) creates a real perverse incentive for them to wait as long as they can,” Democratic Representative Elaine Nekritz said about the buyers of vendor invoices.  State spokeswoman Meredith Krantz defended the program, saying it helped vendors “be paid more quickly than the state’s payment cycle would otherwise allow.”  One big non-profit participating state vendor, Chicago-based Safer Foundation, saw no other options. “Do you want to get nothing or 90 percent now and the other 10 percent later?” said Victor Dickson, the group’s president and CEO. “We chose, ‘Let’s get 90 percent and keep serving our clients.’” politicsNews
illinois fix unpaid bills may end financial time bombchicago reuters illinois owes handful financial consort million obscure program intended speed overdue payments state vendors analysis state records shows political feuding republican governor bruce rather democrats control legislature kept illinois without full operating budget since july contributing doubling unpaid bills backlog the amount overdue bills could reach billion percent available operating revenue current fiscal year ends june rather administration projected come fiscal backlog projected balloon billion no state refers payments extent illinois manage cash flow analysts said the program seeks avert nightmare scenario state worst financial shape country shutdown essential services employee health insurance disruption prison food supplies mothballing state trooper cars need fuel maintenance i think alternative us illinois central management services director michael hoffman told legislative panel may but comes heavy cost unlimited fees approaching percent cases illinois government whose general obligation go grade credit ratings lowest among states the state negative credit outlook means billion outstanding go bonds could lunch closer junk level growing unpaid bill pile ipairs ability provide essential services affects debt payments inflated already huge billion unfounded pension liability no state business would operate recurring obligations vendors setting payment structure dramatically inflated costs services said lawrence small president civic federation government watchdog under vendor support initiative vs program launched last year replace similar plan introduced state vendors get paid without delay percent owed financial lenders when state finally pays vendors get final percent lenders keep fees in illinois receivables days past due accumulate interest rate percent per month for lenders risk state pay need fight compensation courts happened yet the firms include financial institutions citibank bank america corp distressed debt investor tied rather campaign donor political insiders including hillary clinton campaign manager former republican illinois governor lindsay trittipoe majority investor consortium illinois financing partners ll told reuters group performing vital function rather exploiting state financial series our money flowing market helping wheels commerce keep working said city bank america declined comment story representatives largest buyer receivables vendor assistance program investors respond interview requests fees unpaid bills program growing million per week could exceed million june according reuters analysis state data by end rather term january total interest unpaid receivables program could exceed million progress reducing bill backlog reuters calculations show graphic that total represents illinois allocated operating funds last june keep seven nine public universities open six months as late september four participating vs lenders bought unpaid receivables worth billion program penalties killings surpassed million continue grow reuters found illinois law places limit long late fees accrued since state spent million penalties according state comptroller data three four firms involved also took part similar program launched previous democratic governor pat quinn its current version sparked questions firms vetted lack disclosures owners financing patch accounting vendor payments additionally state business registration one firms payplant llc expired two months program launch according illinois secretary state office a company representative blamed procedural lapse said begun process october reinstate llc status the focus transparency said illinois treasurer michael frerichs democrat if program like want turn loan using state data reuters calculated average rate late payments percent late september during period dow jones industrial average gained percent it seems creates real perverse incentive wait long democratic representative line nekritz said buyers vendor voices state spokeswoman meredith grant defended program saying helped vendors paid quickly state payment cycle would otherwise one big participating state vendor safer foundation saw options do want get nothing percent percent later said victor jackson group president ceo we chose let get percent keep serving politicsnews
Your task is to classify the provided input as real or fake news. Label 0 is meant for fake news, Label 1 is for real news. TEXT: Illinois fix to unpaid bills may end up as financial time bombCHICAGO (Reuters) - Illinois owes a handful of financial consortia more than $118 million under an obscure program intended to speed up overdue payments to the cash-strapped state’s vendors, an analysis of state records shows. Political feuding between Republican Governor Bruce Rauner and Democrats who control the legislature has kept Illinois without a full operating budget since July 2015, contributing to a doubling of the unpaid bills backlog. The amount of overdue bills could reach $13.5 billion, or 40 percent of available operating revenue, when the current fiscal year ends June 30, the Rauner administration has projected.  Come fiscal 2022, the backlog is projected to balloon to $47 billion. No other U.S. state defers payments to the extent Illinois does to manage cash flow, credit-rating analysts said. The one-of-its-kind, bill-payment program seeks to avert the nightmare scenario for a state in the worst financial shape in the country: a shutdown of essential services such as employee health insurance, a disruption of prison food supplies or mothballing of state trooper cars in need of fuel and maintenance. “I don’t think there is any other alternative for us,” Illinois Central Management Services Director Michael Hoffman told a legislative panel in May. But it comes at a heavy cost with unlimited late-payment fees now approaching 20 percent in some cases for Illinois’ cash-strapped government, whose general obligation (GO) low-investment grade credit ratings are the lowest among U.S. states.  The state’s negative credit outlook means its $26 billion of outstanding GO bonds could lurch closer to the junk level if the growing unpaid bill pile impairs its ability to provide essential services, affects debt payments and inflates its already huge $130 billion unfunded pension liability.     “No other state or business would operate by incurring obligations to its vendors and setting up a third-party payment structure that dramatically inflates the costs of those services,” said Laurence Msall, president of the Chicago-based Civic Federation, a non-partisan government watchdog.  Under the Vendor Support Initiative (VSI) program launched last year to replace a similar plan introduced in 2011, state vendors can get paid without delay 90 percent of what they are owed by state-designated financial lenders.  When the state finally pays, the vendors get the final 10 percent, while the lenders keep the late-penalty fees. In Illinois, receivables more than 90 days past due accumulate interest at a rate of 1 percent per month. For the lenders, the risk is that the state will not pay up and they will need to fight for compensation in courts, but that has not happened yet. The firms include financial institutions such as Citibank N.A. (C.N) and Bank of America Corp (BAC.N), a distressed debt investor tied to a Rauner campaign donor, and political insiders, including Hillary Clinton’s 2008 campaign manager and a former two-term Republican Illinois governor. Lindsay Trittipoe, majority investor of the second-largest consortium, Illinois Financing Partners LLP, told Reuters his group was performing a vital function rather than exploiting the state’s financial miseries. “Our money is flowing into the market, helping the wheels of commerce to keep working,” he said. Citi and Bank of America declined to comment for this story and representatives from the largest state-qualified buyer of receivables, Chicago-based Vendor Assistance Program, and some of its investors did not respond to interview requests. Fees on unpaid bills in the program have been growing by more than $2.6 million per week and could exceed $194 million by June 30, according to a Reuters analysis of state data as of Sept. 28. By the end of Rauner's term in January 2019, total interest on unpaid receivables in the program could exceed $351 million if there is no progress in reducing the bill backlog, Reuters calculations show. (Graphic: tmsnrt.rs/2fW1vxj) That total represents more than what Illinois allocated in operating funds last June to keep seven of its nine public universities open for six months.  As of late September, four participating VSI lenders had bought 15,369 unpaid receivables worth $1.12 billion under the program. Late-payment penalties on those billings surpassed $118 million and continue to grow, Reuters has found. Illinois law places no limit on how long the late fees can accrue and since 2010 the state has spent about $929 million in late-payment penalties, according to state comptroller data. Three of the four firms now involved also took part in a similar program launched under previous Democratic Governor Pat Quinn. Its current version has sparked questions over how firms were vetted, a lack of up-to-date disclosures about their owners and financing, and patchy accounting of vendor payments. Additionally, state business registration of one of the firms, Payplant LLC, expired two months before the program’s launch, according to the Illinois secretary of state’s office. A company representative blamed “a procedural lapse” and said it had begun the process in October to reinstate its LLC status. “The focus should be on transparency,” said Illinois Treasurer Michael Frerichs, a Democrat. “If we have a program like this, we don’t want to turn it over to loan sharks.” Using the state data, Reuters calculated the average rate on late payments at 8.14 percent through late September. During that same period, the Dow Jones Industrial Average only gained 3.65 percent. “It seems that (it) creates a real perverse incentive for them to wait as long as they can,” Democratic Representative Elaine Nekritz said about the buyers of vendor invoices.  State spokeswoman Meredith Krantz defended the program, saying it helped vendors “be paid more quickly than the state’s payment cycle would otherwise allow.”  One big non-profit participating state vendor, Chicago-based Safer Foundation, saw no other options. “Do you want to get nothing or 90 percent now and the other 10 percent later?” said Victor Dickson, the group’s president and CEO. “We chose, ‘Let’s get 90 percent and keep serving our clients.’” politicsNews
Your task is to classify the provided input as real or fake news. Label 0 is meant for fake news, Label 1 is for real news. TEXT: illinois fix unpaid bills may end financial time bombchicago reuters illinois owes handful financial consort million obscure program intended speed overdue payments state vendors analysis state records shows political feuding republican governor bruce rather democrats control legislature kept illinois without full operating budget since july contributing doubling unpaid bills backlog the amount overdue bills could reach billion percent available operating revenue current fiscal year ends june rather administration projected come fiscal backlog projected balloon billion no state refers payments extent illinois manage cash flow analysts said the program seeks avert nightmare scenario state worst financial shape country shutdown essential services employee health insurance disruption prison food supplies mothballing state trooper cars need fuel maintenance i think alternative us illinois central management services director michael hoffman told legislative panel may but comes heavy cost unlimited fees approaching percent cases illinois government whose general obligation go grade credit ratings lowest among states the state negative credit outlook means billion outstanding go bonds could lunch closer junk level growing unpaid bill pile ipairs ability provide essential services affects debt payments inflated already huge billion unfounded pension liability no state business would operate recurring obligations vendors setting payment structure dramatically inflated costs services said lawrence small president civic federation government watchdog under vendor support initiative vs program launched last year replace similar plan introduced state vendors get paid without delay percent owed financial lenders when state finally pays vendors get final percent lenders keep fees in illinois receivables days past due accumulate interest rate percent per month for lenders risk state pay need fight compensation courts happened yet the firms include financial institutions citibank bank america corp distressed debt investor tied rather campaign donor political insiders including hillary clinton campaign manager former republican illinois governor lindsay trittipoe majority investor consortium illinois financing partners ll told reuters group performing vital function rather exploiting state financial series our money flowing market helping wheels commerce keep working said city bank america declined comment story representatives largest buyer receivables vendor assistance program investors respond interview requests fees unpaid bills program growing million per week could exceed million june according reuters analysis state data by end rather term january total interest unpaid receivables program could exceed million progress reducing bill backlog reuters calculations show graphic that total represents illinois allocated operating funds last june keep seven nine public universities open six months as late september four participating vs lenders bought unpaid receivables worth billion program penalties killings surpassed million continue grow reuters found illinois law places limit long late fees accrued since state spent million penalties according state comptroller data three four firms involved also took part similar program launched previous democratic governor pat quinn its current version sparked questions firms vetted lack disclosures owners financing patch accounting vendor payments additionally state business registration one firms payplant llc expired two months program launch according illinois secretary state office a company representative blamed procedural lapse said begun process october reinstate llc status the focus transparency said illinois treasurer michael frerichs democrat if program like want turn loan using state data reuters calculated average rate late payments percent late september during period dow jones industrial average gained percent it seems creates real perverse incentive wait long democratic representative line nekritz said buyers vendor voices state spokeswoman meredith grant defended program saying helped vendors paid quickly state payment cycle would otherwise one big participating state vendor safer foundation saw options do want get nothing percent percent later said victor jackson group president ceo we chose let get percent keep serving politicsnews