Illinois Finally Has A Budget

Michael Madigan
House Speaker Michael Madigan (D-Chicago) during a vote that passed a budget package that included a $5 billion income tax increase. Gov. Bruce Rauner vetoed the budget proposals. The State Journal-Register via AP
Michael Madigan
House Speaker Michael Madigan (D-Chicago) during a vote that passed a budget package that included a $5 billion income tax increase. Gov. Bruce Rauner vetoed the budget proposals. The State Journal-Register via AP

Illinois Finally Has A Budget

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Updated at 5:25 p.m.

After a two-year political war that saw public universities and many social services take enormous financial hits, Illinois finally has a state budget. Lawmakers in the House were able to secure enough votes on Thursday to override Republican Gov. Bruce Rauner’s budget veto, a move that essentially puts into effect a $36 billion budget that’s financed partly with a nearly $5 billion income tax increase.

The vote to override the governor’s veto was delayed after the building temporarily went on lockdown because a woman threw white powder in Rauner’s office, the lieutenant governor’s office and the House gallery, according to officials. The woman was taken into custody, and the substance was not hazardous, said Dave Drucker, a spokesman with the Illinois secretary of state’s office, which handles security at the Capitol. 

The budget impasse, which began in 2015, is believed to be the nation’s longest fiscal stalemate since at least the Great Depression.

Lawmakers approved the bill to raise taxes by a 71-42 vote. The spending bill passed 74-37. It takes 71 yes votes to override a veto.

Illinois House Speaker Michael Madigan said after the vote that the newly approved state budget was the result of bipartisan efforts to end a “destructive” impasse that has gripped state government for more than two years. He called the votes the right move for the future of the state.

But Rauner immediately issued a statement blasting the move, calling the day’s action “another step in Illinois’ never-ending tragic trail of tax hikes.” Rauner said that the state needs other reforms, including property tax relief and term limits.

The first-term governor, already facing several Democrats hoping to displace him in the 2018 election, took to the trail Wednesday to implore the House to sustain the vetoes. Rauner has taken to calling the revenue increase “Speaker Madigan’s 32 percent tax hike.”

“This is not just a slap in the face to Illinois taxpayers. This is a 2-by-4 smacked across the foreheads of the people of Illinois,” Rauner told reporters at a bar on Chicago’s Far South Side. “This tax hike will solve none of our problems. In fact, in the long run, it will make our problems worse, not better.”

Rauner, a former private equity investor whose massive personal wealth has largely funded the state Republican Party, said he would do “everything possible” to persuade House members to rebuff Madigan. But speaking to reporters Wednesday, he did not elaborate on his tactics. Fifteen House Republicans broke ranks and voted in favor of the budget package last weekend. Each of the budget bills cleared the 71-vote veto-proof majority.

For two weeks, lawmakers have been meeting in a special session called precisely to deal with the budget impasse. The session was capped by a flurry of activity on Tuesday, when the Senate sent a revenue bill — including the the permanent income tax hike — and spending blueprint to Rauner. The governor rapidly vetoed it, only to have the Democratic-controlled Senate just as swiftly override him.

After the House was unable to summon enough representatives for votes earlier this week, Madigan scheduled the override attempt for Thursday, saying House Democrats are eager to join with Republicans “to begin healing the wounds of the last several years.”

Rauner has sought pro-business reforms as a condition to any budget deal, including a property tax freeze and term limits for state lawmakers. He’s repeatedly blamed the state’s failures on Democrats in power, namely Madigan.

Democrats have said many of Rauner’s reforms would hurt the middle class.

Even though the budget is now state law, there’s still an open question about whether K-12 schools will finally get state funding. The language of the legislation could effectively block schools from getting state money because the budget, as written, doesn’t spell out how that cash should be distributed.

The legislation calls for K-12 spending to be distributed using a new “evidence-based” school funding formula. One version of such a formula, Senate Bill 1, passed both chambers of the General Assembly in May. Supporters called it historic, but Rauner has promised to veto the bill, saying it’s a bailout for Chicago Public Schools.

With a $6.2 billion annual deficit and $14.7 billion in overdue bills, disaster was around the corner. The United Way predicted the demise of 36 percent of all human-services agencies in Illinois by year’s end. Road construction work totaling billions of dollars was shutting down. Public universities have been cut to the bone and faced a loss of academic accreditation.

The standoff entered a third fiscal year on July 1. Credit-rating houses threatened to downgrade the state’s creditworthiness to “junk,” signaling to investors that buying state debt is a highly speculative venture. Two agencies gave Illinois some breathing room Monday after Sunday night’s House votes.

But on Wednesday a third, Moody’s Investors Service, put Illinois under review for a downgrade even if lawmakers override Rauner’s veto. Moody’s said that while lawmakers have made progress, the package the House will consider Thursday does not address the state’s massively underfunded pensions or do enough to pay down its bill backlog.

Rauner on Wednesday dismissed the possibility of another downgrade for Illinois, which already has the worst credit rating of any U.S. state.

“Don’t listen to Wall Street. Don’t listen to a bunch of politicians who want power,” he said after local business owners talked about rising property taxes and residents going to Indiana to shop. “Listen to the people of Illinois.”

This is a breaking news story. Check back for updates. The Associated Press contributed to this report.