The Chicago Sun-Times Editorial Board sent the nominees for Illinois comptroller a list of questions to find out their views on a range of important issues facing the state of Illinois. Incumbent Democrat Susana A. Mendoza submitted the following responses:
The job of state comptroller involves more than writing checks. How would you keep fellow elected officials and the public informed about the level of state debt? What would you do to encourage the state to make responsible financial decisions?
Mendoza: You need not rely on promises. You can look at my record for the year and a half I have served as Comptroller to see how I will keep the public informed about the level of state debt and use my office to make responsible financial decisions. You can look at my website every day where I update the state’s debt level in our Backlog Voucher Report. Here are a few examples:
I was surprised to learn when I took office as Comptroller, the state’s Chief Fiscal Officer, that I couldn’t see half the state’s bills. I got a call from a Republican state representative. He said he had a nursing home chain based in his district that was owed $21 million by the state and he asked if I could help.
I had my staff check and we saw the bills we had on-hand for them totaled about $2.1 million. I called the representative to give him what I thought was the “good news” that it was only $2.1 million and we could probably free up some of that for them. He checked back with his constituent and they said, No –it’s $21 million. And that’s how I learned about the practice of agencies sitting on bills, sometimes for years at a time, before they forward them to my office, and my office’s inability to see those liabilities when they’re at the state agencies.
I thought it was pretty bad, early in my tenure that I went to bed thinking we had a backlog of $13 billion in unpaid bills. I woke up and found out it was a backlog of $14 billion. What happened overnight? The state Department of Health and Family Services sent over a billion dollars worth of bills they had been sitting on for almost an entire year. Now my office has to plan and cash-manage to make sure we make required monthly payments to our bond-holders; to the pension funds, to schools. It doesn’t help to have a surprise batch of $1 billion in bills dropped on my lap that I had no idea even existed. Could you run a business like that?
So I drafted the Debt Transparency Act, which requires state agencies to report to my office every month the amount of unpaid bills they are sitting on; whether any late payment interest penalties are owed on those bills, as well as on bills my office has paid; and whether they have sufficient appropriation authority from the Legislature to cover their expected bills for the fiscal year.
Now that all seems pretty common-sense, and all the legislators I talked to were surprised my office didn’t already have that information and were happy to support the bill. It turned out the only requirement agencies had to report debt was a once-a-year, single-page report delivered inn October, but was only current as of June 30th. I talked to every legislator and my bill passed with bipartisan majorities in both houses.
The governor surprised a lot of people by vetoing the bill, saying it would be “burdensome.” Nobody was buying that. I traveled the state talking to legislators and editorial boards, all of whom endorsed an override of the governor’s veto. The governor’s legislative director, Darlene Senger, tried very hard to convince legislators to vote against transparency for the Comptroller’s office by upholding his veto of my Debt Transparency Act. But all those Republican and Democratic legislators apparently found my arguments in favor of transparency more persuasive. For the first time in the history of Illinois, the House of Representatives unanimously overrode the governor’s veto. In the Senate, all but 3 senators voted for the override.
It’s hard to overstate the importance of the Debt Transparency Act. It really revolutionizes state finance. I didn’t realize as a legislator – and none of my fellow legislators I spoke with did either – that we used to draft budgets based on year-old numbers. At your home, do you balance your checkbook just once a year? With year-old numbers? This year, for the first time, legislators had current numbers as they worked with each other and the governor’s office to draft the consensus budget that passed this year.
Now, instead of a once-a-year report that is three months old, we publish the Debt Transparency Report every month. You can see the reports and every reporting agency’s numbers on our website, which is really the best window into Illinois’ finances. Thanks to the DTA we learned for the first time just how much in Late Payment Interest Penalties the state had racked up during the 2-year budget impasse: More than $1 billion.
Giving taxpayers this kind of a window into state finance puts them in a position to demand more accountable budgets from their legislators and the governor.
After two years without a budget, the Governor appeared hell-bent on forcing a third year without a budget to further cripple our state, so I used my position to meet with legislators of both parties and educate them on the dire consequences of a third year without a budget and the resulting plunge into junk-bond status. I released a video that went viral, getting 2.8 million views in just two days. Republican and Democratic legislators came together and overrode the Governor’s veto so we could finally have a budget. That budget gave the governor authority to issue up to $6 billion in bonds to pay off old debts.
The governor said he wasn’t interested in doing that. So I had to launch a statewide tour to make the case, to civic groups and editorial boards that this was as simple as refinancing your home. If you’re paying 12 percent on your mortgage and you can get 3.5 percent, you do it. Right? After two months of fighting me on this, the governor relented and agreed to the refinancing. So I attacked the highest interest-accruing debt first. As I paid down billions of dollars of Medicaid debt, I got federal matching funds and was able to turn that $6 billion into $8.8 billion. I slashed the backlog of bills from $16.7 billion to about $8 billion today. That lower interest rate – 3.5 percent compared to 12 percent – will save Illinois taxpayers about $4 billion to $6 billion over the life of the bonds.
That’s how I think the Comptroller’s office should be used.
Who is Susana A. Mendoza?
She’s running for: Illinois Comptroller
Her political/civic background:
- Comptroller of Illinois 2016-present
- Chicago City Clerk 2011-2016
- Illinois State Representative, 2001-2011, representing the 1st district on Chicago’s Southwest Side.
- 12th Ward Planeteers 1997-1999 – Organized youth to clean up the neighborhood
- Serve on the board of Arrupe College of Loyola University of Chicago
Her occupation: Comptroller of Illinois
Her education: Bachelor of Arts degree in business administration from Truman State University, Kirksville, Mo., 1994; Bolingbrook High School 1990
Her campaign website: susanamendoza.com
Her Twitter handle: @susanamendoza
Recent news: Susana Mendoza
What would be your top three priorities?
Mendoza: 1) Using a moral compass to prioritize which bills get paid first: Honoring our debt service and pension obligations; keeping nursing homes and hospices afloat; keeping the state’s school doors open – all take precedence over less urgent uses of state funds. The Comptroller’s Office continues to function in triage mode even after we passed a budget. It will take years to bounce back from the devastation inflicted upon small businesses, colleges and universities, and service providers as a result of the budget impasse. (See Question # 3).
2) Transparency: The transparency revolution we have brought to the state budget – actual numbers that you the taxpayers of Illinois can see – empowers taxpayers to demand more responsible budgets from their legislators and the governor. The Debt Transparency Act (DTA) for the first time gives us an up-to-date accounting of the bills that make up the bill backlog — as well as the interest owed on them. This marked the first year legislators worked on the budget with fresh numbers thanks to the DTA. The DTA was just the first of four transparency initiatives that passed the legislature with unanimous or near- unanimous-margins. (See Question #9) We have ideas for more in the coming legislative sessions.
3) Modernizing Technology: The upgrades we are undertaking, which you have already begun to see on our revamped website, will make the Comptroller’s office a model of payroll and accounting innovation. In the same way I pushed a technology upgrade through the Chicago City Clerk’s office, moving from once-a-year to year-round city sticker sales, I hope to upgrade the Comptroller’s systems that issue all the state’s checks. The upgrade at the clerk’s office brought millions of dollars in savings to city taxpayers and the upgrades in the Comptroller’s office should likewise bring efficiencies. In my nearly two years on the job, I have introduced the lowest budgets in 20 years, doing more with less and returning $1 million to state taxpayers.
Our state now has a budget, but it continues to struggle with a $8 billion backlog of unpaid bills. How would you prioritize which bills get paid first?
Mendoza: When I took office in the depths of the budget impasse, I found myself in a position that the Comptroller was never meant to be in — making life-or-death decisions about who gets paid now and whose payments have to wait. That’s because the state doesn’t have enough money to pay all its bills.
Bills owed to hospice centers were backlogged some 4-6 months, Some nursing homes were on the verge of closing because the state had not paid them in so long. Quarterly categorial payments in the state’s schools were running nearly a year behind. These are the funds that schools rely on to fund special education programs and transportation for children with special needs. Social service agencies around the state were closing, cutting back services, laying off staff. Who WAS getting paid? Certain government contractors. My predecessor quietly transferred about $70 million in the days before I took office to pay some connected consultants.
Committed to running the Comptroller’s Office to be both morally and fiscally responsible, I quickly re-arranged priorities to make sure services for the state’s most vulnerable got paid first. In order to avoid any further damage to our credit ratings, I start by paying our debt service payments and pension obligations. Medicaid and General State Aid payments are next. Nursing homes, hospice centers, children and adults with disabilities and those caring for them are at the front of the line once those other mandated payments are met. I have and will continue prioritizing education payments at every level, from early childhood through K-12, colleges and universities. With billions still in the backlog, my office continues to operate in triage mode, making sure that we are able to be responsive to struggling vendors who are on the verge of missing payrolls or struggling to stay in business.
When I was running for Comptroller, I promised to move the employee bonuses that a few politically connected employees got just before Election Day to the back of the line for payment in Illinois. The incumbent I was running against said that could not be done, and that I must not understand how the Comptroller’s office works. On my very first day in office I made that change she said could not be done. I included legislator paychecks among the expenses that could go to the back of the line, but the courts eventually overruled me on legislative pay.
Do you support a constitutional amendment to merge the state offices of treasurer and comptroller? Why or why not?
Mendoza: No. I have supported merging government officers where it makes sense and where there exists actual duplication of efforts. But it is important to understand the history of why these offices were separated in the first place. The framers of the state constitution were familiar with the potential for corruption in having one officer in charge of receiving money, investing it and paying it out. That’s because Orville Hodge, the former Auditor of Public Accounts, whose office had the combined duties of Treasurer, Comptroller and Auditor, embezzled over $6 million in state funds in the 1950’s – the equivalent to $57 million in today’s money – far more than the farcical projected savings number that has been thrown about. The framers separated the offices to serve as a check-and-balance on the Governor’s office and each other.
But Orville Hodge is ancient history and we have computers now so that couldn’t happen again, right?
Not only can it still happen, it actually did happen. As recently as 2012. Right here in Illinois. Rita Crundwell, the combined Comptroller and Treasurer of Dixon, IL, was convicted of embezzling $53.7 million from the town’s taxpayers. It’s a sad fact that the two largest government embezzlement schemes in the history of the United States of America both happened in Illinois and they both happened at the hands of people who served in a combined treasurer/comptroller role.
Different states have different governance structures regarding their financial officers. In Illinois, the Comptroller is the state’s Chief Financial and Accountability officer. Merging those two functions diminishes the important checks and balances created by the Constitution. There have been times and will be times again when both offices are held by Republicans and I will argue this same point just as strongly then. Who else believes these checks and balances are important? The credit rating agencies who assess Illinois’ worthiness for bond investors. They say they may lower their outlook on Illinois credit worthiness if that important internal control is removed. So not only would a merger for merger’s sake not save money – it would cost Illinois taxpayers money.
Please challenge backers of the “Save $12-$14 million by combining offices” canard to show their math. How do you save $12-$14 million by merging an $8 million office with a $23 million office? Even if you assume you could lose one entire HR department, a communications department and a general counsel, that doesn’t even reach $1 million. To save more than that, they would need to abolish statutorily mandated critical functions of both offices, like the state’s oversight of cemetery trust funds; collection of debt for other offices of government; the Bright Start program; and collecting and reporting municipal financial information. The numbers just aren’t there. Force them to spell out which programs they would abolish.
The truth is, there are negligible savings and the risk of far greater costs to taxpayers if we put an ideological drive to “shrink” government – without really shrinking it – over common sense. Let us not forfeit these critical internal controls and vital checks and balances.
Illinois’ unfunded pension liability has ballooned to more than $130 billion. What should be done about that?
Mendoza: The Comptroller’s primary role in confronting our pension liabilities is to make sure the state’s pension obligations are paid every month on-time and in-full. As Comptroller, I have made this a priority. By reliably paying our pension liabilities on time and in full we provide a layer of confidence to both the state worker and the market. Reliability also avoids further exacerbating the crisis and creating greater uncertainty in the size of the state’s unfunded obligations. The ratings agencies have thanked me for my firm stand about making regular pension and debt service payments.
As I have done since day one, I will continue to educate legislators and the Governor on the necessity of tackling this issue. The current governor has chosen to ignore these warnings, as he has proven year after year that the pension shortfall is only something he campaigns against — not something he has ever introduced a single proposal to fix. The previous administration under Governor Quinn made the pension shortfall a priority — passing a bill in 2011 to put all new hires from that point forward on a reduced, more sustainable pension plan. Then, after years of serious effort and compromise — passed a bill to address pensions that the state supreme court threw out. That court ruling severely limited the options available for the state to address the pension problem.
I think legislators are anxious to re-address the problem, and I think they will have a strong ally in Governor Pritzker to once again take up the pension problem, which has been put on the back-burner by the current administration for the past four years. The provision in the current-year budget allowing state employees to cash out their pensions now was not a bad proposal but, I do not see as many people taking advantage of it as the legislature and administration budgeted for. There is some merit to the Cullerton “consideration” model to incentivize employees to choose plans that will not cost the state so much in the long run. Furthermore, any talk about new revenue streams should include specific earmarks dedicated to our existing pension debt.
There is a push in Illinois to legalize marijuana, in part to increase state revenue. What is your view on that?
Mendoza: We have to be careful not to let the state’s need for revenue drive the policy on marijuana. I favor a two-part analysis:
Should we legalize marijuana? Illinois’ experience since legalizing marijuana for a fixed number of medical conditions has been positive. The data so far appears to show that the states that have legalized marijuana have not experienced significant increases in crime or drug dependency as a result of that legalization.
Prosecution of marijuana use falls disproportionately on minorities though use of marijuana is not concentrated among minority populations. Arrest and Incarceration rates show the criminal justice system treats marijuana as a social/recreational drug in one community and a criminal violation in the other.
Keeping marijuana illegal empowers and enriches the gangs that distribute it widely in Illinois despite it being nominally illegal.
So I would support legislation to legalize and regulate the sale of marijuana in Illinois. A benefit of that would be defunding the criminal gangs that control the technically illegal but widely available marijuana distribution in Illinois under the current system.
How much should we tax marijuana? If marijuana is legalized, I think we should adopt a tax policy that targets revenues from marijuana to particular policy goals: law enforcement; drug dependency treatment; education; and/or paying down pension liabilities.
To avoid a repeat of the lottery experience, we would have to first establish a benchmark level of funding for education or whichever policy goal is designated. We should require that these new funds would not be used to supplant existing funding for these state programs.
The taxation level would be negotiated legislatively but should be in line with liquor and cigarette taxes.
Do you support a graduated income tax? Why or why not?
Mendoza: I absolutely support abolishing Illinois’ regressive flat-tax system which charges middle-class taxpayers the exact same rate as billionaires. Illinois taxpayers need look no further than some of our neighboring states to see systems that charge middle-class taxpayers no more than they are paying now and perhaps even less and those able to pay more a little more. This would help Illinois pay down its debt and do a better job tackling its worst-in-the-nation pension shortfall. I do not favor the kind of county income tax Indiana has.
Chicago and Cook County are on their way to paying a $13-an-hour minimum wage. Should the state of Illinois increase its minimum wage, which is currently $8.25 an hour? Please explain.
Mendoza: Yes. A gradual increase in the statewide minimum wage is overdue. State residents from Galena to Cairo need a more livable minimum wage. Majorities in both houses of the Illinois legislature passed an increase in the minimum wage and Governor Rauner vetoed it. I am confident under a better governor next year, Illinois residents will get a minimum wage that more fairly compensates them for their work.
When is it appropriate for the comptroller to take public positions on legislation before the General Assembly?
Mendoza: Whenever she can make a positive difference for the people of Illinois.
Dawn Clark Netsch, Dan Hynes, Judy Baar Topinka, all appropriately championed legislation during their terms as comptroller. Secretary of State Jesse White; Attorney General Lisa Madigan and Treasurer Michael Frerichs appropriately take public positions on a variety of legislation before the General Assembly.
The drafters of the Illinois Constitution created the office of Comptroller as an elective office — not a ministerial, appointive office — because the framers wanted an independent advocate, not someone to keep their head down and take orders from the governor or the legislature.
I’m very proud of the strong legislative record I compiled in less than two years:
1) The Debt Transparency Act (DTA), for the first time gives us an up-to-date accounting of the bills that make up the bill backlog — as well as the interest owed on them. Prior to the DTA’s passage, legislators worked on the budget each spring with nearly year-old numbers reported in October that were only current as of June 30 of the previous year. It’s hard to overstate the importance of the DTA, which the governor vetoed, incorrectly saying it was “burdensome.” His legislative director, Darlene Senger, focused her efforts on trying to get legislators to uphold the Governor’s veto of the greatest transparency reform in the history of the Comptroller’s Office – the very office she seeks to lead. Thankfully, Republican and Democratic legislators heeded my calls for greater transparency and unanimously voted against her and the governor. This marked the first year legislators worked on the budget with fresh numbers thanks to the DTA. The DTA also answered the question for the first time of how much the state had racked up in late-term interest penalties over the course of that impasse: $1 billion – and how much deficit spending occurred in Fiscal Year 2017: $2.5 billion.
2) I also passed the Truth-in-Hiring Act because for as far back as we could trace, governors have been presenting dishonest budgets to the public. The Truth-in-Hiring Act requires anyone working for the governor to appear on the governor’s payroll, instead of allowing governors to mask the size of their budgets by paying for their employees out of other agencies’ payrolls, depriving state agencies already scarce resources. This deceptive practice, utilized by governors of both parties, is known as “offshoring”, and is now illegal.
3I also passed the Budgeting for Debt Act which will require governors to account for late payment interest penalties in their proposed budgets and map out how they plan to pay down the late payment interest penalties that have accrued as a result of the budget impasse. During the last budget impasse, the state racked up $1.104 billion in late payment interest penalties. Moving forward, future budgets can no longer ignore those outstanding liabilities and must address them head-on.
4) And, I passed the Lender Transparency Act (LTA) which for the first time will provide clarity regarding the participating lenders in the Vendor Payment Program who profit from the state’s chronically late payments. While these lenders serve an important function in helping Illinois vendors survive by fronting them money while waiting for the state to pay them, it comes at a cost to taxpayers of 12 percent interest on late bills. It’s a great deal for lenders, and a raw deal for taxpayers. Up to now, there’s been very little visibility on who makes up these lending groups; where their financing comes from and who’s profiting from the states’ financial dysfunction. The LTA puts the Vendor Payment Program into state statute, requires information on the program be made available to the public, and requires that the Auditor General audit the program.
I consider that strong legislative record an argument in favor of my re-election. If the qualities you seek in a Comptroller are obedience and silence, I’m probably not your candidate.
What are the biggest differences, as the potential comptroller, between you and your opponent?
I’m energetic; experienced; concerned about the impact of our actions on Illinois citizens; and I’ve demonstrated that even during the most partisan times, I can work with members of both parties to get the job done.
When I was elected to the House in 2000 after running against Speaker Madigan’s candidate twice, I knew I wasn’t going to get any help passing my bills from my own party leadership, so I cultivated friends across the aisle, going down to Southern Illinois, to my Republican colleagues’ districts, to visit their farms and explore their coal mines. I listened when they talked about the issues important to them. All my bills passed the legislature with bipartisan majorities. I forged relationships that are still paying off today.
When I introduced my Debt Transparency Act last year, I talked to just about every legislator from both parties about the need for this important transparency reform. Governor Rauner did not want to disclose how many unpaid bills he was hiding at agencies, so he sent his legislative director, my opponent Darlene Senger, out to convince the GOP house members she had served with until recently that this bill would be “overly burdensome.”
This legislation was necessary because, before, Illinois taxpayers bore the cost of hidden interest on Illinois’ enormous bill backlog with no clarity about how deeply in debt the state was, or how much interest is accruing on overdue bills, or how long it will take to pay that debt off.
Taxpayers deserve to know how their tax dollars are being spent. Fortunately, instead of accepting my opponent’s arguments, legislators listened to me and voted unanimously to override the Governor’s veto of my bill. This was the first time in history that a governor’s veto was overridden unanimously in the House of Representatives.
This was by all accounts the biggest transparency reform for the Office of Comptroller since the office was created in 1970 and my opponent worked against transparency, as well as increased accountability for wasteful spending and unnecessary spending on interest payments, for the office she wants to lead. I believe that alone should disqualify her.
Here’s another difference. When I first heard 13 veterans at the state’s Quincy Veterans Home had died from Legionnaires Disease, my first thought was — Oh my God. Are the other residents there safe? What can we do?
When my opponent Darlene Senger heard the news, her first thought, recorded in an email to her fellow senior staffers on Governor Rauner’s team was to say, “We can maybe tie this back to Duckworth.” She wanted to deflect blame for the deaths of 13 war veterans away from her boss and onto Senator Tammy Duckworth, a decorated war hero who had left the state’s Veterans Affairs office six years before the Legionella Outbreak. Senger’s concern was protecting her boss, Governor Rauner, not the veterans, and it speaks to a lack of character that disqualifies her for a position of public trust.
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September 30, 2018 at 08:45PM