SPRINGFIELD - State officials are set to take out a $1 billion loan to clear a backlog of bills owed to health-care providers.

The move, which comes just three months into the state's fiscal year, could give pharmacies and hospitals a needed infusion of cash to avert closing down or cutting off services to poor customers.

"We're glad that they've finally gotten around to doing it," said pharmacist Andy Hudson, whose family operates Hudson's Drug Shop in the Ford County community of Paxton.

The loan got the go-ahead late Friday when state Treasurer Judy Baar Topinka lent her support to the idea after initially expressing reluctance to back the plan, which was broached by state Comptroller Dan Hynes last month.

"While borrowing is arguably the least responsible form of fiscal management, short term borrowing is far more palatable than borrowing from Medicaid providers," Topinka said in a letter to Hynes.

Topinka, a possible Republican candidate for governor, had wanted the state to have to repay the loan by March, but Gov. Rod Blagojevich wanted more time. The loan now will have to be repaid by the end of the state's fiscal year in June.

The governor's office believes the loan program will save the state money because the interest on a short-term loan is likely to be lower than the cost of late-payment penalties.

Once the paperwork is completed, Illinois will owe money to bond-holders rather than pharmacists, hospitals and other health-care providers.

The Illinois Pharmacists Association was among the groups pressing for the loan, saying its members were being hurt financially by payment delays that ranged from 111 days to nearly 240 days.

A survey by the pharmacists found that some independent pharmacies were owed more than $1.5 million.

Top members of the group, including Hudson, met with Blagojevich's budget director John Filan Thursday and pleaded for action on the loan.

Hudson said the state was four months behind on an estimated $200,000 in payments to his family business.

The comptroller's office said money could begin flowing to the health-care providers by early November.

Kurt Erickson can be reached at kurt.erickson@;lee.net or 782-1249.