At the same time he’s criticized Gov. Bruce Rauner for failing to pass a state budget, former Gov. Jim Edgar and his business partners are looking to profit from the state of Illinois’ financial crisis, records obtained by the Chicago Sun-Times show.
Edgar is chairman of the board of Illinois Financing Partners, which on Wednesday won the Rauner administration’s OK to advance money to vendors that have been forced to wait months to get paid by the state. The payoff for the Edgar company? It gets to keep the late-payment fees when the state finally pays up.
Edgar — a Republican who was governor from 1991 to 1999 — says somebody needs to stand up for state vendors.
His company joins five others already in the business of bailing out businesses owed money by state government.
“Because we’re in the financial mess we’re in now, you need something like this to protect the vendors,” says Edgar, whose company’s vice chairman is another former politician — ex-U.S. Rep. Jerry Costello, a downstate Democrat who’s now a lobbyist in Springfield and Washington.
Edgar says he gets an undisclosed monthly stipend from the company. He and Costello also each have a 1 percent stake in it, records show.
Illinois legislators approved a temporary state budget Thursday after more than a year of wrangling that forced drastic cuts in social services and other programs.
Edgar has been among those calling on fellow Republican Rauner to reach a compromise with Democrats, led by Illinois House Speaker Michael J. Madigan, D-Chicago, on a comprehensive spending plan that would cover the state’s full fiscal year, which began Friday.
“You can’t get things done if you’re not willing to meet your adversary halfway,” Edgar said of Rauner June 7 at an Illinois Campaign for Political Reform luncheon. “It’s obvious what we’ve done the last year hasn’t worked.”
The budget impasse has contributed to an $8 billion-plus backlog in unpaid state bills. The state has to pay 1 percent interest a month on all bills that are more than 90 days past due.
Rather than wait months to get paid, state vendors that qualify can collect 90 percent of what they’re owed by selling their unpaid bills to one of the six “qualified purchasers,” who pay them the remaining 10 percent when the state pays the bills in full. In exchange, the vendors forego their late-payment interest.
That interest can be lucrative: Since 2003, the state of Illinois has paid more than $1 billion in late fees, including more than $508 million in just the last three budget years, according to state Comptroller Leslie Munger’s office.
In the year without a budget, Munger lacked the authority to pay many bills, which has slowed the “Vendor Payment Program” that now includes Edgar’s company to a virtual halt. But the Rauner administration has set up an alternate program, called the Vendor Support Initiative, that’s allowed the qualified purchasers to keep fronting money to certain vendors.
Approval of a complete state budget is expected to make the vendor-bailout business more stable. Still, Edgar says his urging Rauner to pass a budget isn’t about enriching himself.
“If the state ever did get their act together, this entity would go out of business,” Edgar says of his company. “Unfortunately, we’re not there.”
Edgar says he got involved with Illinois Financing Partners through Bill Fleischli, who worked for the state Department of Transportation when he was governor and now is executive vice president of the Illinois Petroleum Marketers Association. The majority owner of Illinois Financing Partners — Lindsay Trittipoe of Richmond, Va. — has financed environmental cleanup around defunct underground petroleum storage tanks through another company he heads.
Illinois Financing Partners says it has a $500 million commitment from Bank of America to help purchase vendors’ bills, according to its application to the state Department of Central Management Services filed in April.
Since the Vendor Payment Program’s inception in 2011 under then-Gov. Pat Quinn, a company founded by Madigan aide-turned-lobbyist Brian Hynes and Patti Solis Doyle, a former campaign manager for Hillary Clinton whose brother is Ald. Danny Solis (25th), has gotten most of that business, the Sun-Times reported last fall.
Since then, their company, Vendor Assistance Program, has bought more than $706 million in vendors’ unpaid bills, including $432 million belonging to state health insurance provider Blue Cross Blue Shield. Vendor Capital Finance has purchased $137 million in unpaid bills, and Payplant has bought $391,037 in bills.
Though he’s been critical of Rauner on the budget, Edgar lauded him Friday in a statement released by Illinois Financing Partners, saying: “By allowing this financing to take place, the governor has helped over 80,000 state employees, their families and retirees. He deserves praise for putting people before politics.”