SPRINGFIELD, IL — The Illinois General Assembly approved legislation, proposed by Comptroller Susana A. Mendoza and sponsored by State Senator Omar Aquino, D-Chicago and State Representative John Connor, D-Lockport, which will bring transparency to a program that allows lenders to claim millions in late payment interest penalties originally owed to vendors who have done business with the State.
The bipartisan bill passed the State Senate unanimously today 54-0. The House of Representatives approved it 109-7 Tuesday. It now goes to the Governor's desk.
“Lenders in this program are making hundreds of millions of dollars off the State’s fiscal calamity. Taxpayers have a right to know more about who they are and where their financing comes from. This program needs to be governed by state law and there needs to be a basic level of oversight to guard against potential conflicts of interest or corruption,” Comptroller Mendoza said. “The Governor should sign this transparency bill.”
The Vendor Payment Program (VPP) was created to assist struggling vendors as the State’s backlog of unpaid bills grew. VPP allows state-approved third-party lenders, known as qualified purchasers, to pay a portion of unpaid bills for vendors up front. In exchange, the purchasers get the late payment interest penalties when they are ultimately paid by the State.
The program is not codified in state law. The lenders play an important role in keeping vendors afloat but little information is made public in terms of how much state debt is purchased through the VPP and there is currently no disclosure of who is financially backing the qualified purchasers.
“Are there conflicts of interest in this program? Right now, there’s no way for us to know. The Vendor Payment Program has been important at times when Illinois has been a bad business partner and failed to pay its bills on time. But it needs to be regulated by law and regularly audited, so taxpayers can have confidence in this program that is filtering hundreds of millions of state dollars to private interests,” Representative Connor said.
Senate Bill 3560 would put VPP in state statute, require information on the program be made available to the public, and require that the Auditor General audit the program.
“Most Illinoisans don't know that the State pays 12% interest on many of its late bills, much less that there are people profiting off the State's dysfunction,” Senator Aquino said. “Lenders should be subject to the same level of scrutiny as anyone doing business with the State.”
You can download the PDF version of this release here.