Rhode Island news
State falling behind on bill payments
01:00 AM EDT on Wednesday, March 26, 2008
PROVIDENCE — The State of Rhode Island is not paying its bills on time.
Key officials acknowledged yesterday that state government is at least five weeks behind on payments to hundreds of companies contracted to provide state services. In some cases, unpaid invoices date to September.
“Our dental clinics ran out of amalgam to fill fillings,” said Joanne McGunagle, director of the Cranston-based Comprehensive Community Action Program, which has 72 contracts across state government to provide social services. “At one point we … said we’re just going to shut down because we can’t afford to pay staff.”
The agency did not shut down, despite going more than four months this winter without being paid by the state. Instead, McGunagle said she relied on bank loans to cover outstanding invoices that totaled nearly $700,000.
“Why should businesses in the state of Rhode Island have to take out loans — and pay interest — to do the business of the state?” she said. “That’s just not acceptable.”
Despite a current-year budget deficit of at least $151 million, the state is not broke, according to the governor’s office.
The crux of the immediate problem, administration officials said yesterday, lies in Carcieri’s recent move to consolidate the state’s accounts payable functions.
Up until January, state departments had their own staff dedicated to paying bills. As part of the governor’s sweeping work-force reduction plan, however, those duties have been centralized in the Department of Administration.
A total of 185 people processed a combined 8,016 invoices across state government last year, according to data provided by the DOA.
The governor’s new system shifts that responsibility to 14 full-time workers, although the administration hopes to add three more positions soon.
“The state needs to pay its bills. It needs to pay them on time,” said newly appointed Department of Administration director Jerome F. Williams to the House Finance Committee yesterday. “I can assure you that we will attack this vigorously.”
Some state employees are working Saturdays to dent the backlog. But it will take at least another two months to get caught up, according to DOA Executive Director Ronald N. Renaud.
“Right now we believe we’re going to be OK,” he said. “It’s a short-term problem.”
Meanwhile, lawmakers have been hearing from concerned constituents.
Sen. Rhoda E. Perry, D-Providence, said the Fox Point Senior Center recently went more than a month without state funding.
“The director and another staff took no salary for two weeks,” Perry said, noting that much of the senior center’s funding came from federal grants distributed by the state. “It has nothing to do with the federal government being late, and all to do with the state government having laid off all these people, or given early retirement, or not hired replacements. And the staff doesn’t have the expertise to cut a check.”
The governor announced a dramatic plan to cut the state’s work force by 1,000 employees last May. In the subsequent months, Carcieri molded his proposal to include a combination of layoffs, contractor reductions, retirements and unfilled vacancies.
In all, the governor’s office has issued layoff notices to 161 state workers, of which 137 had left state government as of yesterday, according to Melanie Marcaccio, the DOA’s deputy personnel administrator.
The centralization of accounts payable resulted in at least six layoffs, according to Renaud, who projected saving taxpayers $156,000 this fiscal year and another $416,000 next year. The other employees who previously processed invoices have been shifted to other duties.
Carcieri spokesman Jeff Neal dismissed the late bill payments as the pains of going through a major transition.
“Unfortunately, the state bureaucracy has over the years been constructed in such a way as to make change very difficult. The system is built to protect the status quo, to prevent reform,” he said. “At the heart of these temporary disruptions is the fact the state is being forced to jump through a number of bureaucratic hoops. Doing so takes a little time. Once we complete that process, we expect that this will actually result in timely payments at less cost to Rhode Island taxpayers.”
House Finance Committee Chairman Steven M. Costantino, D-Providence, said the problems could have been avoided.
“I would have expected that there would have been some backup planning or transition planning as we moved this forward not to delay payments to vendors, especially six or seven months,” he said, noting that he has also heard from several organizations recently, including community health centers, complaining of late payments. “Our health and human-service delivery system can be compromised simply by a bureaucracy that is not able to pay them for services payments provided.”
Meanwhile, Renaud said the state will expedite payment to organizations that are in immediate peril.
The Comprehensive Community Action Program was among those who have been paid recently, following meetings with Costantino, Carcieri and other administration officials.
“I think the people at the state level are doing the best they can with the resources they have,” McGunagle said. “The problem we have is that we can’t survive that way. I’ve got a payroll to meet.”
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