When Austin’s Circle Family Healthcare Network filed for bankruptcy last month, the community health center was just the latest victim of Illinois’ financial woes.

Experts and political leaders insist the state’s huge backlog of unpaid bills is hurting the neediest residents of Illinois and demands a permanent solution.

“Circle Family Healthcare … provides services to families and children in Austin, and they have been struggling because they have not been getting their payments from the state,” said state Rep. La Shawn Ford (8th).

This year, Circle has eight contracts with the state of Illinois that altogether are worth almost $1 million, and the state is behind on half of them, according to the Illinois Comptroller’s online ledger. Illinois has about 162,000 unpaid bills, worth more than $6.5 billion, according to the comptroller’s office. That translates into hundreds of private companies, nonprofit groups and local governments that are forced to survive without timely payments.

And many of them are finding it hard to do.

Ford said the state contracts with organizations to provide necessary services that the government cannot provide on its own. The effect of the state’s late payments to those organizations, Ford adds, can already be seen in Austin.

“With the state of Illinois not paying its providers, we have seen a higher level of violence, STDs and dropouts,” he said.

Larry Joseph, director of fiscal policy for Voices for Illinois Children, said many community organizations have been forced to make drastic cuts because of the late state payments. Circle has not been able to pay some of its employees in over a month, as reported by AustinTalks.

“A lot of these organizations have had difficulties meeting payroll … and have had to lay off staff, cut hours and have longer waiting times for clients,” Joseph said.

Circle had to scale back employment at all of its six clinics starting about six months ago, going from 125 total employees to 70. Its Humboldt Park behavioral health center at 1633 N. Hamlin has also shut its doors.

“We just couldn’t continue to provide services because of the slow state payments,” Circle CEO Andre Hines recently told AustinTalks.

Some of Circle’s behavioral health grants have been “totally cut out” and others have been reduced, Hines added.

Rep. Ford said late state payments are not acceptable, especially in a neighborhood in need of support like Austin. Ford said the state should address the problem by first reordering its priorities, starting by spending more money on education and health care, and less on prisons.

But that will not be enough, insists Ralph Martire, executive director of the Center for Budget and Tax Accountability in Chicago.

Illinois’ budget woes are a structural problem requiring permanent structural solutions, Martire explained.

His group advocates for Illinois to adopt a graduated income tax rate, similar to the one used by the federal government. Ford said he supports the graduated income tax rate, in which the more money a person makes the greater percentage he or she pays in income tax. Illinois residents — regardless of income — currently pay a flat 5 percent.

“That’s one way to bring the revenue up, to make sure we ask those that have more to pay their fair share,” Ford said.

He added that the state needs to focus on closing tax loopholes for large corporations. Such loopholes are costing Illinois millions of dollars in revenue each year.

A graduated income tax rate could net the state an additional $2 billion per year while lowering the taxes of most Illinois residents, according to Martire’s organization. Whatever the solution, Joseph said Illinois needs to find one soon and stick to it. But he worries that Illinois will “kick the can down the road” and not deal with the larger issues confronting the state.

“It is the inclination of the legislature to put off tough decisions, which is how we got into this mess in the first place,” Joseph said. “The longer we wait, the worse it will be.”

Ellyn Fortino contributed.