Back in December, Comptroller Dan Hynes cautioned that borrowing $1.4 billion to make good on a growing backlog of bills to social service providers was no quick fix. He added that, absent some swift action, sliding revenues and tanking investments meant the ongoing budget crisis would only worsen the situation for many nonprofits across the state and the citizens they serve. If this St. Louis Post-Dispatch article is any indication, the reckoning may have arrived:

Hynes’ office has more than $2.8 billion of bills awaiting payment; another estimated $1.6 billion is still being processed by the Department of Healthcare and Family Services. And by the end of June, the state has to pay back a $1.4 billion short-term loan it took out in December to ease a massive backlog of bills then.

That’s $5.8 billion owed on state contracts for services already rendered.

Despite all the warning signs, a lack of government action at a time of historic demand has spawned problems too severe for the agencies to manage alone. With private donations drying up and no bridge loans available to tide them over, strapped nonprofits (some of which are owed upwards of $1 million by the state) are looking to cut more services, the Post Dispatch goes on to report. 

Meanwhile, a new report (PDF) from Civic Enterprises and the Democratic Leadership Council (DLC) argues that, if states don’t get their act together quick, the “triple whammy” of waning charitable donations, state budget crunches, and rising demand could have a devastating effect on the overall economy. Considering that one in 13 people (PDF) in Illinois rely on a nonprofit for a paycheck, it’s not hard to see how program cuts could force more people onto the unemployment rolls.

The DLC has some pretty specific federal policy recommendations that could help states, nonprofits, and needy Americans weather the current economic storm. For instance, they urge Congress to pass the Serve America Act, which would greatly expand the volunteer base that many nonprofits rely upon. They also urge the government to take advantage of “community development financial institutions and nonprofit housing organizations” as part of their efforts to stem the foreclosure crisis. The report states:

[T]he federal government should make full use of these lean, dependable, results-driven nonprofits, and not simply pour more taxpayer dollars into the same institutions that brought on the economic crisis in the first place.

While these types of policies would certainly help, more sustainable funding mechanisms (i.e. a publicly popular progressive income tax system) are ultimately needed in Illinois to end the cycle of shortchanging nonprofit partners. But that will take the sort of political will legislators in the Prairie State have yet to exhibit.