The states face budget shortfalls in excess of $100 billion and are coming up with creative ways to conceal their problems, including stiffing vendors. The Wall Street Journal reports that New York State has been unable to pay approximately 30,000 agencies with which it contracts for social services. State agencies are quietly asking the contractors to continue to provide services without any assurances that the government will pay them or when any payment could be expected. Typically, New York uses emergency appropriations, called extender bills, when it cannot reach a budget agreement between the Governor and the State Legislature. This may be the first time that funding for such social services has not been included in the extender bill. The Governor warns that chaos may result if a budget is not passed this week. But it is not just social service agencies that are suffering; construction companies report that New York State is also in arrears in paying them, as well, and they have been quietly asked to continue to work without pay. Given that nearly all of the states are facing varying degrees of fiscal strain, New York’s experience is not likely to be unique. Small businesses that have the state government as a client face an awful choice: do you continue to provide services, if you have a sufficient reserve of working capital to do so, in the hope your loyalty will be rewarded later? Or do you cut your losses and deem the government an undesirable client?