CHICAGO (CBS) – Congress isn’t the only government body facing a “fiscal cliff.” Illinois lawmakers also are being warned about the state’s dire financial situation, which could get even worse if the federal government has to slash funding to the states.

WBBM Newsradio’s John Cody reports Gov. Pat Quinn’s budget office said Thursday that the state owes vendors $8 billion in unpaid bills, and is facing $95 billion in unfunded pension liabilities.

Natalie Davila, research director at the Illinois Department of Revenue, said that’s not the worst of it. The “fiscal cliff” that Congress is trying to avoid at the end of the year could force the federal government to slash revenue to the state.

“It could generate a loss of revenue – anticipated revenue in Fiscal ’13 – of almost $200 million,” she said. “And, even more shocking, in Fiscal ’14, over $800 million.”

LISTEN: WBBM Newsradio’s John Cody Reports

State budget director Jerry Stermer pictured the fiscal situation as worse than a coastal hurricane. He said it is more like the 2004 tsunamis in the Indian Ocean.

“They swept inland, many many miles, and ripped up businesses of long-standing, and homes, and entire communities. That’s kind of the way we have to look at our own fiscal situation here in Illinois. Everything is different since 2008,” Stermer said.

Stermer and Davila spoke to the House Revenue and Finance Committee, which is considering a measure to cap funding of raises for unionized state workers in contract talks with the governor’s office.

Union officials said the proposal would restrict their bargaining rights.

The committee’s chair, state Rep. John Bradley, said a line has to be drawn, because the state’s fiscal crisis is getting worse.

“The state continues to owe billions of dollars to state vendors. Many members of the General Assembly are not prepared to support pay increases when we still owe all of these extra bills,” he said.

Union members said it’s unfair to make union workers pay for problems created by politicians who have underfunded the state’s pension funds. They said the state shouldn’t be mandating limits on pay raises for state workers, while handing out tens of millions of dollars in tax breaks for Sears and the Chicago Mercantile Exchange.