Comptroller’s Race: Mendoza touts state’s fiscal progress, while Teresi focuses on recent corruption

SPRINGFIELD – When former Gov. Bruce Rauner and the Democratic-controlled General Assembly spent more than two years at an impasse in negotiating a state budget from mid-2015 into 2017, the office of Illinois comptroller was thrust onto center stage.

As the state’s chief fiscal officer, the comptroller is often referred to as manager of the state’s checkbook. But without an approved budget, the comptroller had no legal authority to write checks on state funds, leaving vendors, contractors, health care providers and many others in a lurch.

More than 500 days into that impasse, there was a special election for comptroller. The last elected person to hold that job, Judy Baar Topinka, died unexpectedly just a few weeks after winning reelection in 2014.

Rauner, a Republican who had just been elected himself, appointed Leslie Munger, a business executive, to fill the seat until another election could be held to serve out the remaining two years on Topinka’s term. And in that election, Chicago City Clerk and former state Rep. Susana Mendoza, a Democrat, prevailed by 5 percentage points.

“And so I probably signed up for the toughest job in government at that time,” she said during a podcast interview with Capitol News Illinois. “You’ll recall, we basically had, I wouldn’t say an absentee governor, but we had a governor who was actively destroying the state’s finances and decimating the state’s social safety network.”

Mendoza was reelected to a full four-year term in 2018 and is now seeking another term, this time facing McHenry County Auditor Shannon Teresi in the Nov. 8 general election.

“I am running because Illinois is the most corrupt, the most fiscally mismanaged, highest taxed, highest foreclosure rate in the nation,” Teresi said in a separate interview. “And I am running because I am a (certified public accountant), I am a certified fraud examiner, I’m a certified internal auditor with a proven track record and financial leadership experience the state has never had before in its history of the comptroller’s position.”

The budget impasse ended up lasting just over two years, from July 2015 to August 2017. During that time, the state’s backlog of past-due bills reached a high of $16.7 billion while the state’s credit rating fell to just one notch above “junk” status.

Mendoza cites paying down that backlog as her biggest accomplishment in office. Today, she said, vendors are being paid usually within 10 days and the state is operating on a regular “accounts payable” cycle.

In addition, each of the three major credit rating agencies has raised the state’s rating by two notches, meaning it is still the lowest of any state in the nation but moving in a positive direction.

“That is nothing short of remarkable,” Mendoza said. “And I’m very proud that the people of Illinois trusted me not just once, but twice by electing me twice to this position.”

Teresi, however, counters that the credit upgrades and paying down past-due bills was more the result of federal pandemic relief money that was pumped into Illinois.

“(Gov. JB) Pritzker right now is campaigning on the bond rating when we have the worst bond rating in the nation,” she said. “The state has received over 185 billion collectively to not just the state, but all the agencies within the state. And this has bolstered the economy. And they are trying to take credit for it.”

The $185 billion figure she cites includes all pandemic relief combined, including stimulus checks to individuals, aid to local governments and schools, Paycheck Protection Program loans to businesses, and various kinds of enhanced unemployment benefits for laid-off workers.

According to state records, the state itself received about $8.1 billion, which Mendoza and the Pritzker administration say was all used for one-time expenses related to the pandemic. The other pandemic-related revenues, meanwhile, have increased base revenues across the U.S. in the two most recent fiscal years.

Mendoza also cites as one of her early accomplishments the passage of the 2017 Debt Transparency Act, which lawmakers approved over Rauner’s veto. It required state agencies to report monthly the volume of bills they were holding but had not yet sent to the comptroller’s office for payment. It also required agencies to report bills that were more than 90 days past due and thus subject to late-payment penalties of 1 percent per month. 

“And now agencies are disincentivized from holding onto those bills for a long time, because they look like they’re being irresponsible,” she said. “And so now you’ll actually see that it’s rare to find an agency holding on to a bill for longer than, let’s say 60 days, because we’ll know that they’re doing that.”

Lawmakers took other actions during that time to address the bill backlog. In 2017, when the backlog hit its peak, they authorized issuing $6 billion in bonds, taking the total backlog down to about $9.1 billion. And in 2018, they authorized a new Vendor Payment Program that allowed third-party investors to purchase unpaid bills that were owed to vendors and then collect the interest when the state eventually paid the bill.

In 2020, as the state was making progress paying down the backlog, some investors who took part in the program complained vocally when Mendoza made a decision to pay the principal owed on the bills, but not the interest penalties. A spokesman in her office said in an email that the state still owes a little more than $43 million in late-payment interest.

Mendoza said she’d like to see a phase-out of that program as the state’s finances stabilize.  

“Hopefully, we will never ever be in a situation where we need to rely on these-third party lenders, because that’s what those investment companies are,” she said. “They made a huge amount of profit on the state’s dysfunction.”

Teresi earned a master’s degree in accounting from Northern Illinois University and began her career as an associate at the accounting firm PricewaterhouseCoopers in 2007.  She joined McHenry County government in 2016 as a financial reporting manager and was elected as county auditor in 2018.

This year, she ran unopposed in the primary as part of a slate of candidates endorsed by GOP megadonor Ken Griffin. She has focused much of her campaign on the theme of rooting out corruption in state government.

“There hasn’t been a top-down approach at addressing corruption on the state level, and fraud, waste and abuse,” she said.

As comptroller she said she’d launch a statewide initiative addressing corruption, noting, “the largest amount of corruption and fraud is found based on tips.

“And so, as your next comptroller, I will be working with the inspector general’s office and promoting the hotline statewide tasking every taxpayer, business, vendor that works with the state government to report fraud, waste and abuse.”

Teresi said she was excited about the GOP ticket, including gubernatorial candidate Darren Bailey, a state senator who has made several controversial statements such as calling Chicago a “hellhole” and comparing abortion in the United States to the Holocaust.

“What we see is a movement with Darren Bailey’s race and the Republican Party as a whole,” she said, later adding, “I think there’s a lot of enthusiasm. …I’m happy to run with Darren Bailey and all of the other statewide candidates.”