In the week from June 4 to June 11, the general fund backlog for the State of Illinois, reported at the Illinois Comptroller’s website, fell from $6.9 billion to $4.8 billion. That coincided with the delivery of the proceeds of an extraordinary loan to the State of Illinois from the Federal Reserve Bank of New York.
Yet law and regulation seem to imply that Fed emergency lending like this can’t be undertaken for insolvent borrowers, with past due bill backlogs explicitly identified as evidence of insolvency.
So it appears that Illinois is getting an emergency loan and paying down its bill backlog with it, even as law and regulation imply that the loan shouldn’t have been extended because of the bill backlog.
Further questions arise. For example, who received the $2 billion in payments? Is it possible it went to companies like this one?
I called the Illinois Comptroller’s office and noted the recent decline in the bill backlog. The representative said “yes, we’re making good progress there.” Then I asked who was paid and that was the end of the information line, at least so far.