Interview: Illinois Comptroller Susana Mendoza

Susana Mendoza has been the Comptroller of Illinois since winning a special election in 2016. Her office is responsible for managing state governments day to day spending, which has led to some unusual adventures in an era when states are competing for masks, ventilators and other medical supplies.

The convertaion also touched on issues with state finances. On Wednesday afternoon, after Mendoza’s interview went to air, Gov. J.B. Pritzker detailed the loss of revenue the state is expecting on account of the COVID-19 pandemic.

Transcript

Brian Mackey: Let's begin by talking about procurement. This is not a topic that usually quickens the pulse, for most people anyway, but it's gotten exciting enough that you were invited on CNN last week. Can you tell me what is the story that has gotten so much attention for the way Illinois goes about purchasing goods and services?

Comptroller Susana Mendoza: Sure. So that was an interesting story. Given just the new reality of what it is to procure goods in the state of Illinois during the COVID-19 pandemic. We found ourselves in a mad rush to secure PPE for doctors, nurses, frontline providers, and unfortunately found ourselves in somewhat of a what felt like the wild wild west — a black-market-type scenario where we were competing against other states, with incredibly short timeframes, in which we had to act and get funds released to procure these goods. And you know, it was It was just a crazy situation.

There was one scenario that obviously got a lot of attention where we thought we were going to lose contract for 1.5 million masks. And the reason we thought we were going to lose it is because the day that the check was being issued to the vendor, the vendor notified us that if he did not receive the check, in his bank account by 2 p.m. that day — which he was in one of the suburbs of Chicago, and the check is physically being written in Springfield — if he didn't receive it in before that 2 o'clock deadline, that we would lose that purchase of 1.5 million masks to a different state, a different buyer.

And we really for a split second thought, Oh my gosh, we're going to lose these masks which are so critically important. Remember, this is in the very early days where it was just a mad rush to get your hands on PPE.

And one of my assistant controllers who is physically located in Springfield said, No way are we going to lose this. And that was Ellen Andres. And she said, I'll drive the check over to this guy if I need to. And so she got in her car, and she sped as fast as she could down I-55 and met the vendor about 126 miles out of Springfield in Dwight at a McDonald's parking lot, verified that this was in fact the person who we did the deal with, and then handed off a $3.5 million check for these masks and other necessary critical PPE to be procured.

I mean, really, the thought of that story being a real factual thing that occurred seems so out of the realm of anyone's craziest imagination, but that's essentially where we're at as a state today.

Mackey: She didn't she didn't have to like take possession of the masks in her trunk at the McDonald's or anything, right?

Mendoza: No, no, no. The story kind of sounds like that, but no. She just had to make sure that the check got into the bank and the only way to do that was for her to meet the guy more than halfway down because he would have never been able to make it to Springfield and back to get the check in on time.

But you're just thinking outside of the box with like a nanosecond to get it right. And my staff is amazing. Ellen Andres got the job done that day for the folks on the front lines, and two days later Cortez Gillespie, another one of my employees in Springfield, did the same thing. He had a little bit more of a window of time, so he didn't have to break too many speeding rules, but nonetheless also took a $3 million-plus check and hand-delivered it at a Road Ranger gas station on the side of the road, many miles — over 100 miles — away from Springfield again. So these are just crazy situations, obviously completely out of the norm, which is why they've drawn the attention of, you know, folks like CNN and other national news networks.

Mackey: So you've begun tracking how much Illinois spends on purchases related to its COVID-19 response. Where where are we on that right now?

Mendoza: So as of today, we have spent $174 million, specifically on purchases related to PPE — COVID-19 related spending. And we thought it was important for the sake of transparency that taxpayers know where their money is going. And we started our first point of this is on March 24. And you'll see, for example, on March 24 we spent $5 million. The next day that had gone up to $24 million, and it just keeps going up and up and up.

Some days the activity is more than others, but the worst part about this is that this $174 million is money that we had not planned for in the budget, right? These are expedited payments that we never envisioned having to make, which means $174 million less than what we had planned for. And that's just the tip of the iceberg — we are very likely going to be spending significantly more dollars than the $174 that's been physically issued as of today.

Mackey: We've been kind of talking about the role of the comptroller, and I know that before I began covering state government as a reporter many years ago, I didn't really understand what the comptroller does. So just briefly, can you help people — remind people what it is that the controller's office is responsible for in Illinois government?

Mendoza: Sure. So the comptroller is the state's chief fiscal officer; my job is to manage the state's fiscal accounts. The role is typically one that people — if they actually even know what a comptroller does — they assume it's just a person who writes the checks, right? Pays the state's bills. But clearly, in Illinois, the controller's office has a much different, more outsized role than perhaps other controllers in other states.

Primarily given that over the last — I've been controller for now three years — but two of those three years we were in the middle of a horrible budget crisis. In my first two years as controller, I took office right in the middle of the worst fiscal crisis in the history of the state of Illinois. We're used to dealing with crisis, we're prepared to deal with crisis, we know how to get through it, and more importantly, get out of it. And this is just one more crisis that we will get through.

It is expensive, though, when you think about — when we talk about the PPE expenditures, you know that the 174 is many times more than what we should have paid for that PPE, given that we were essentially thrown into a black-market situation, and having to compete against other states, and therefore driving the price of each one of those masks or bottles of hand sanitizer through the roof.

Mackey: This conversation is airing on what would have been tax day but of course, state and federal tax deadlines have been delayed. And do you have a sense of what the fact that income tax receipts into Illinois might be significantly less — in past years, recently, we've talked about the "April surprise," where tax revenues exceeded expectations. Do you have a sense yet of what we are potentially facing going forward with this year and the recession we're in?

Mendoza: Well it's too early to give you a number, but clearly we will see significantly less revenues come in in July than we had originally anticipated. I mean, it's just common sense that when you have 10% of the workforce across the country stop working, and similar numbers here in Illinois, that is going to have an immediate impact on the revenues that we're collecting as a state.

Furthermore, the fact that we don't have any revenues to report — like the significant influx of revenues that we normally get in April, which is the tax month, help us to catch up with some of the bill backlog. Help us to catch up with some of these more critical payments, and even get ahead in other areas, where we want to put money in so that we don't have to really scramble two, three months down the road — we're not able to do any of that. And we don't know what the actual significance of this delay will be until we get to July with the new the new deadline for income tax filing.

So in July, we'll have a better opportunity to talk about raw numbers and how bad of a hit this was to us in terms of tax revenues coming in. But that will be the immediate — (the) July report will deal with this tax year filing, but it's not so going to tell us where we're going to be for the next few months. And that's really going to be a combination of things.

It's how bad of a hit did we take in our normal tax revenue year? How bad of a hit do we take with the loss of people during the height of the stay-at-home orders? How soon those stay-at-home orders get lifted, or how they get lifted — how they get rolled back into the marketplace will also have significant impact on our revenue projections. So again, it's too early to tell them numbers, but without a doubt it is going to hurt and it will be painful.

Mackey: Illinois does not, as you well know, have a rainy day fund to speak of. I mean, there is a fund, but I think you've said that there's about 30 seconds — enough money to fund government for about 30 seconds in it. So one of the ways the state does manage its finances — one of the ways you manage the finances — is choosing who gets paid and when in terms of paying the state's bills. And we've seen the backlog of bills creeping up. It was a little below $6 billion in October of last year. In early March, it was below $7 billion, and earlier this week it was up above $8 billion. How are you prioritizing who gets paid and when?

Mendoza: Right, that's a great question. So I should say right now we're in the middle of writing prioritizing COVID-19, coronavirus, so anything dealing with that and the front-line effort to  combat this is going to be our most immediate priority.

Knowing that, it still means that we have additional priorities of funding. So, for example: healthcare, debt service, state payrolls, K-12 general state aid funding, right? Our required pension payments — by law those will continue to be made. And we're going to make sure that the state's most vulnerable citizens' urgent needs — those things that they need more than anything — will continue to be served.

But I think the most important thing that we can do right now is to assure the vendor and the provider community that like in the past, we will eventually catch up and we will be making our payments to them as quickly as possible. Just right now our priorities have to shift to COVID-19, debt service, healthcare, education, state payrolls and required pension payments.

Mackey: Do you have a sense yet as to how high the backlog will get and when?

Mendoza: Not yet, but we are closely monitoring that. You can see it's been ticking up. What I can assure you is that this last year's budget did not give us significant tools to chip away at the bill backlog. We're still utilizing existing tools that are in our arsenal, like interfund borrowing and short-term borrowing. But I've tried to be very, very good about only utilizing short-term borrowing where it will actually save us money, so that we tackle those bills that are accruing 12% interest, for example, and pay a much lower interest rate.

But again, this is uncharted territory for any state. It was tough to navigate this fiscal crisis in the past; it's going to be harder to do so moving forward. But like I said, our office is experienced when it comes to dealing with crisis and we will be prepared to step up to the challenge.

I'm not as much concerned about navigating the fiscal waters here, as I'm concerned about the emotional toll and the death toll that this COVID-19 pandemic has brought upon our state and on our country as a whole.

We can get the finances put in check. I think that the governor will fight for every dollar that he can get from federal funds. I know that he and other governors have requested additional aid from the federal government to states that have been impacted in a large way by COVID, and I would assume that we're going to need more dollars than what has initially been promised to us or that assurance that we're going to be getting from the Cares Act. But my job is going to be to try to make the best use of every single federal match that we can get, and prioritize the bills in a way that gives us the biggest bang for that federal buck that we may be getting down the road.

Mackey: Last thing I want to ask you about, I know I'm hosting a live radio program now from my house and I have two young children, and I kind of live in mortal fear that they're going to burst in at any moment during one of these conversations. How have you adapted to the stay-at-home orders and running a state agency at this really surreal time that we're all living through?

Mendoza: Yeah, it sure is. I think that most of my employees, including myself, will be very happy to get back to work once that day arrives, and actually see other people and not have to worry about your kids barging in on you.

In my case, I've done like four interviews today, and in one of them my husband came down to make a sandwich for my seven year old son right in the middle of my interview, and it did throw me off a little bit, right?

And the worst part was in my last interview, my mom — she lives with us, she lives downstairs and she has a blue and gold macaw — if anybody knows it's a huge bird. And for no reason, I don't know, it just started squawking at its highest level. It kind of sounded like someone was being killed or tortured in my house in the middle of my Skype or Zoom interview. So it's hard to stay focused when you have things like that happening.

It's also though — it was funny, because he started squawking and I said the bird's upset, but I mean, who wouldn't be upset in today's day and age? So you have to try to improvise and just roll with the punches. But certainly it's hard to focus when you've got other things that are are happening in your surroundings, but it's kind of the the beast that we're dealt with right now, right? Everybody is having to figure out new ways to to deal with a very unique and stressful situation. But we're going to be happy to get back to some semblance of normalcy, hopefully not too far distant in the future.

Mackey: Comptroller Mendoza, thank you so much for taking the time to speak with us today.

Mendoza: Oh, my pleasure, thank you. And you hang in there, all right? We're gonna get out of this.

Mackey: Alright, thanks. You, too.

This interview has been edited and condensed.