State Sen. Dan Duffy says he won't complain if he is booted from his Barrington office because the state government hasn't been paying the rent on time.
GNP Management Group Inc. in Tinley Park sent a notice to Duffy's office Wednesday demanding substantial payment if basic services are to continue for his third-floor space on Main Street. The document states there may be "consequences" for Duffy, who received an eviction notice in June, if at least partial payment on four months of back rent is not made soon.
"If this guy evicts me, I'll completely understand and move," said Duffy, a Lake Barrington Republican. "He's completely getting the shaft by the state of Illinois."
Through news conferences and other means, leaders of social service agencies in the Chicago area have been most vocal about how operations and clients are being harmed by late payments attributed to the state's budget problems.
But the agencies are not alone in getting stiffed by the state. Duffy's landlord is one of many building owners, construction companies and other private-sector businesses coping with late state payments.
With a $3.3 billion backlog in bills and $2.5 billion in loan payments due starting next month, there is a long line of creditors seeking money from the state comptroller's office.
Comptroller spokeswoman Carol Knowles said any available cash goes first to education, social services and health care.
Knowles said there is no telling when the state will become whole on its overdue bills. She said that'll depend on the new budget agreed on by the governor and General Assembly, which is supposed to kick in July 1.
Timothy Wargo, who handles Duffy's building for GNP Management, said it seemed attractive to start renting to Illinois government last year because it was perceived as a dependable income source in a difficult real-estate climate.
However, the company's first deal with the state has proved to be anything but steady. GNP has been trying to follow a business plan for the Barrington office based on projected cash flow from the renters.
"It makes it difficult to operate the property, of course," Wargo said. "The bills keep coming in."
GNP is due about $8,000 for Duffy's office, a new tab that has grown since the company received $10,000 in tardy rent payments in October. The company covers utilities and other contract services from the monthly rent it charges.
Duffy received the eviction notice in his office mailbox in late June, but GNP allowed him to stay in the hope the state will become timely in its payments in a soft rental market.
Knowles said the comptroller has received inquiries from several legislators concerned about late payments on office rental bills sent directly to the agency. She said the lawmakers are told their bills are not payment priorities.
Despite the comptroller's $3.3 billion backlog of overdue bills, Boller Construction Co. managed to receive payment after waiting more than six months on a $1 million-plus fee for work as general contractor at College of Lake County. Boller led projects at CLC's Grayslake and Waukegan campuses last summer.
President Lyle Ehlers said the state's tardiness forced Waukegan-based Boller to take "extraordinary measures" to secure financing while it waited for its money. Unlike Boller, some companies quit the CLC projects over the late payments.
Ehlers said Boller wound up making frequent calls to the state comptroller's office demanding its money, as it would from any other deadbeat. He said Boller received payment for the work, with interest, totaling about $2 million on Dec. 31.
One lesson learned, Ehlers said, is companies taking on a state project should do much research to make sure a particular agency's funding source is solid before agreeing to a deal.
"We didn't do a good enough job going into (the CLC work)," he said.
In Libertyville, business owner Jack Martin said seven months of back rent totaling more than $70,000 piled up last year for the secretary of state's facility at his strip mall on Peterson Road. He's rented space to the secretary of state since the 1980s.
Although he considered turning to the courts, Martin decided against it because he knew at some point state money would become available for the late rental payments. He said the $70,000 arrived at year's end, likely because his son kept pressure on the comptroller's office with telephone calls.
Martin said he had the financial wherewithal to survive the late rental payments, but many other property owners are not in the same position.
Democratic state Rep. Paul Froehlich of Schaumburg said his local office has landed on AT&T Inc.'s late-payment list, with staffers having to explain to the company why money for phone bills is slow to arrive.
Froehlich said the tardy state payments to businesses haven't received the same amount of attention as the social service agencies or medical providers. He said the problem could lead to good companies refusing to do business with state government.
"I expect that is going to be more common as the downward spiral continues financially," he said.