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Officials outline vendor-payable backlog, cash-on-hand and plan to prioritize local vendors
Summary
OMB and Department of Finance officials told the budget committee there were roughly $48.4 million in outstanding vendor payments reported for FY2025, which they adjusted after a large insurance payment; the administration described weekly payment prioritization and a plan to submit legislation to address prior-year obligations.
Members of the Committee on Budget, Appropriations and Finance pressed finance officials on outstanding vendor payables, cash flow and a plan to reduce late payments at a June 3 hearing.
Kevin McCurdy, commissioner of the Department of Finance, told the committee the government reported $48.4 million in outstanding vendor payments, $42.2 million of which is attributable to the general and special funds. After accounting for a large monthly health insurance premium that was due June 1 and later paid, McCurdy said the adjusted outstanding balance was roughly $23 million.
“We are focusing on our local vendors, making sure the local mom-and-pop are prioritized and are addressed in a timely manner,” McCurdy said. He told the panel finance now meets with chief financial officers (CFOs across agencies and holds weekly payments meetings to determine what can be paid. The department said it prioritizes payments that keep essential government operations running and looks to get overdue invoices into the finance system so they can be settled.
Officials said the government currently reports about 25 days cash on hand — roughly $94 million — and an outstanding balance on a line-of-credit used for operations and hazard mitigation of about $89.8 million as of April 30. Reimer and McCurdy said the administration also has a $50 million operational tranche and a separate $100 million tranche for mitigation and recovery within the territory’s borrowing facility.
On prior-year obligations, McCurdy said the administration is preparing legislation and said the government requires the Legislature’s authorization to use current-year funds to pay certain prior-year liabilities. “Part of the issue is they the director has allowed for those budgets to be online so that ... folks can address those payments,” McCurdy said. He said a bill to address prior-year vendor obligations was being prepared for the committee’s consideration.
Committee members pressed finance staff on the cause of late payments. McCurdy and other witnesses said common problems include invoices not being entered into the finance system, duplicate internal collection efforts across agencies and agencies’ inconsistent capture of obligations. McCurdy said Treasury and Justice met to coordinate collection of bounced and non-sufficient-funds (NSF) checks and to reduce duplication of recovery efforts. Joel Lee, director of the Bureau of Internal Revenue, added that many returned checks result from banks rejecting signature cards rather than from true NSF cases.
The administration listed steps to reduce payment delays: tighter oversight of agency CFOs, consolidation of rental/leasing where possible to lower recurring costs, targeted efforts to reduce overtime in agencies with large overtime bills, and better invoice-processing discipline by agencies. The committee requested written breakdowns of outstanding vendor payables by vendor type and locality, and finance agreed to provide the data.
The committee also asked for details about the contingency use of the line of credit for payments and the administration said it will provide the governing documents and updated balances in writing to the committee.
