Illinois Gov. Pat Quinn’s budget chief says drastic changes need to be made on how the state funds Medicaid and pensions. David Vaught testified Wednesday at a Senate Approporiations Committee hearing. He said Illinois lawmakers must put more money toward the state’s pension and medicaid systems in the 2013 budget.

The state is facing more than $8 billion in unpaid bills and pension costs on top of a $500 million deficit.

“We clearly are going to have to change things on the liability side, and those are still unclear,” said Vaught.

The governor’s budget office and the non-partisan Civic Federation said without reforming the two systems, the state’s backlog of unpaid bills could reach $35 billion dollars by 2017. The state comptroller’s office agrees with that projection.

Quinn has said making changes to the Medicaid and the pension system will be a top priority this year.