CHICAGO | The state wants to borrow up to $1.4 billion to help pay unpaid bills, even as the federal government approved sending more than $775 million a year over the next five years to help care for Medicaid patients.

The short-term borrowing means businesses waiting months to be paid should get at least some of their money soon.

But the state is just exchanging one kind of debt for another. It will have to pay off the $1.4 billion loan by the end of the fiscal year in June 2009. Given the state's $2 billion budget deficit and a faltering economy, it's not clear where Illinois government will find the money.

"We're running into a dollar crunch," Katie Ridgway, a spokeswoman for Gov. Rod Blagojevich, said Thursday.

Comptroller Daniel Hynes said recently that the state's backlog of overdue bills has reached a record high of nearly $4 billion. Much of that is owed to hospitals, nursing homes and pharmacies that care for poor Medicaid clients, but the state also owes money for more mundane services.

The state has an uneven revenue stream with money coming in at a quicker rate in the spring, Ridgway said in an e-mail. When more cash is available, the state will be able to pay back the borrowing, she said.

Illinois was four months behind paying for garbage pickup at Western Illinois Correctional Center in Mt. Sterling when John Jennings of Jennings Brothers Sanitation in Timewell stopped service in late November.

No garbage was picked up for about 10 days, then Jennings got a check for payment through October on Dec. 1. He declined to say how much the state owed him.

"I told them I didn't want to borrow any more money that they owed me," Jennings said. "I don't like to work for nothing."

Corrections spokesman Derek Schnapp did not dispute Jennings' account but referred payment questions to the comptroller's office.

The state advertised Thursday for bidders for the general obligation certificates needed for the short-term borrowing. The bid deadline is Dec. 11 and Ridgway said they expect the deal to close Dec. 17.

Legislative approval is not needed for the borrowing, Ridgway said. The treasurer and comptroller need to approve short-term loans.

Also Thursday, Blagojevich announced that the federal Centers for Medicare and Medicaid Services approved a five-year deal with the state.

As a result, the Illinois Department of Healthcare and Family Services will distribute more than $1.5 billion a year in Medicaid payments to Illinois hospitals and other medical providers. Half the money will come from the federal government and half from the state.

Ridgway said the state had already counted on that money, which was included in the state budget.

Associated Press Writers John O'Connor and Christopher Wills in Springfield contributed to this report.