A press release from State Rep. David McSweeney:
House Approves McSweeney Legislation to Ensure Late Payment Interest is Included in the Budgeting Process
Springfield, IL – The Illinois House overwhelmingly approved a measure State Rep. David McSweeney (R-Barrington Hills) sponsored to get a better accounting of what the State wastes in late payment interest penalties.
Under the Illinois Prompt Payment Act, after a bill is 90 days late, penalties accrue at a 12 percent annualized rate every additional month the payment is late.
Further, some healthcare bills start accruing interest at a 9 percent anualized rate after being late 30 days.
In January of this year, the State Comptroller released the first ever Debt Transparency Report, which showed that taxpayers are on the hook for about $1 billion in late payment interest penalties as of last December.
“We are paying hundreds of millions of dollars in late payment interest,” McSweeney said.
“Yet these payments are not factored into the budget process and the budget situation just keeps getting worse and worse every year. It is time we addressed the interest payments and get the state budget under control.
Rep. McSweeney worked with the State Comptroller’s office to craft a bill that would add more transparency to the State budgeting process.
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 bill 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.
“Late payment interest penalties are skyrocketing in this State and we need to make clear how much money is being wasted every year on these payments,” McSweeney said.
“Taxpayers should also not be paying interest on voided or potentially illegitimate contracts.
“This is a common sense bill that will help improve the State’s financial position moving forward.”
The Illinois House passed HB 5814 by a vote of 101-0. It now goes to the Senate for their consideration where it will be sponsored by Senator Tom Cullerton (D-Villa Park).erton (D-Villa Park).