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4 Things To Listen For In Governor’s Budget Speech

As Illinois Gov. Bruce Rauner prepares to give his annual budget speech Wednesday, state lawmakers who are wary of another bruising budget battle might be fretting whether it’ll happen all over again in 2018.

Rauner’s speech ushers in the first annual budget cycle since the state went two years with no spending plan. Political differences between the Republican governor and legislative Democrats led to a historic budget impasse that decimated state finances — and bipartisanship.

Just five weeks before the March GOP gubernatorial primary, Rauner takes the microphone to present his version of what the state should prioritize over the next year.

Here are a few things to look for in Rauner’s budget speech Wednesday. 

Signs of another budget impasse

Listen for the tone Rauner strikes in delivering his budget proposal to lawmakers, and whether he mentions anything that must — or must not — be included in a final budget deal.

Lawmakers from both parties said they want to avoid a repeat of the budget impasse. But that could hinge on the durability of the fragile bipartisan voting majority that defied Rauner last July.

In handing Rauner his biggest legislative defeat, 10 House Republicans and one Senate Republican joined Democrats to end the two-year budget stalemate by enacting a plan that boosted personal income tax rates by roughly a third, from 3.75 percent to 4.95 percent.

“We’re hopeful the bipartisan coalition that came together last year to end the unnecessary budget impasse can continue to work so that there is a budget put in place for the next fiscal year. You cross your fingers and hope it can happen,” Madigan spokesman Steve Brown said last month.

But House Minority Leader Jim Durkin, a Western Springs Republican, also is calling for bipartisanship, saying there is no political upside in a re-election year for another budget stalemate.

“Neither party benefits from it, and the state suffers,” Durkin said.

Lower income taxes? Maybe

Listen for whether Rauner introduces a plan to scale back Illinois’ income tax rates — and for how he’ll balance the budget with cuts to services without that extra revenue.

While not formally briefed on the governor’s proposal as of Sunday night, Durkin said he believes Rauner is poised to call for phasing out last summer’s tax hikes — a stance that could put him at odds with Democratic rivals and possibly give his re-election bid a boost.

“From what I understand, there’s a plan to phase it back. It may not be completely over the course of one budget cycle. I have heard that but haven’t heard any specifics about that,” Durkin said.

Asked whether the governor plans to propose a drop in the income tax rate on Wednesday, a Rauner spokeswoman pointed to one of his earlier statements: “It’s going to take a few years, but we’re going to step down the income tax increase and put more money in education, shrink the wasteful spending in government and close this deficit,” Rauner said, according to his office.

The state’s income tax rate will be a key point of contention between the candidates for governor in the November election. Democratic candidates have argued the state should move to a graduated income tax, where wealthy residents would have a higher income tax rate than middle class taxpayers. But Rauner has said moving from the current flat tax to a graduated tax structure would drive top earners out of the state. 

During the impasse, Rauner said he would be willing to sign off on a tax hike if lawmakers agreed to pass other parts of his agenda, like term limits and employer-friendly changes to workers’ compensation regulations. 

While Rauner railed against the personal and corporate income tax increase included in the state budget that passed last year, he has largely left taxes out when making his case for a second term. 

Money for Quincy veterans’ home upgrades 

Rauner has already announced a task force will look into upgrading the Quincy home, but listen for more specifics in his budget.

After mentioning it in his State of the State address last month, expect Rauner to call for some investment in the Illinois Veterans Home in Quincy, where 13 residents’ deaths since 2015 have been connected to Legionnaires’ disease, a form of pneumonia arising from waterborne bacteria.

Last month, Rauner spent a significant chunk of his State of the State address defending his administration’s handling of three successive Legionnaires’ outbreaks at the largest state-run veterans’ home, spanning the last three years.

The governor also told lawmakers that his administration is “investigating the possibility of entire system replacements, and perhaps even a new facility.”

A WBEZ investigation in December delved into the previously unreported cases of 11 families now suing the state for negligence over how it handled the public health crisis, and it raised questions about how quickly the Rauner administration notified residents, family members, and the public during the first deadly epidemic in 2015.

Even though the governor maintains his administration wouldn’t have done anything differently, it recently fast-tracked cost estimates on replacing the facility’s plumbing system. Last week, the state Capital Development Board released a newly revised report from 2016 that estimated the facility’s plumbing system could be replaced for as much as $24.4 million.

His Republican and Democratic gubernatorial rivals have hit Rauner for what they generally have characterized as a mismanaged state response to Legionnaires’ outbreaks at the home in 2015, 2016, and again in 2017.

A way out of Illinois’ fiscal morass

Listen for how the governor plans to balance his budget with cuts and revenue and how he wants to dig Illinois out of the hole largely caused by the two-year budget impasse.

The state government currently owes more than $8.4 billion to vendors, according to the Illinois comptroller. Public universities and social services went months without payments from the state during the impasse, prompting many to cut services, lay off employees, and borrow money to remain open.

Given the state’s bleak financial outlook, Laurence Msall, head of the financial watchdog group The Civic Federation, has recommended the state consider adding some new taxes. Those include a sales tax on certain services already taxed by neighboring states such as Wisconsin — such as landscaping, cable and internet service, and parking and towing. The group also recommends taxing retirement income, an idea that has been debated at the state capitol for years but that comes with numerous political pitfalls. 

In addition, Msall also made the case for updating the state’s bridges, roads, and railways with an infrastructure plan that would be paid for by an increase in the tax on gasoline. 

“We simply can’t target people behind the tree to pay our taxes and our obligation and be serious about stabilizing the state’s finances,” Msall said. “This problem that Illinois faces is going to require joint sacrifice among all the interested group and taxpayers of Illinois.”

Tony Arnold and Dave McKinney cover state politics for WBEZ.

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