Thursday 19th October 2017

Illinois budget that relies on $5 billion tax increase

Lawmakers back today after Republicans line up votes on budget that relies on $5 billion tax increase

ILLINOIS NEWS NETWORK

Illinois lawmakers missed another budget deadline Friday and they’re back at it today to possibly pass a budget that relies on $5 billion in tax increases.

Today is the first day of the new fiscal year, the third consecutive to start without a full year’s budget.

Lawmakers are expected to take up the final pieces of what could be a $5 billion tax increase to pay for a $36.5 billion spending bill, and Republicans are lining up votes. What’s unclear is if a proposed 32 percent income tax increase will be permanent and made retroactive to Jan. 1. A family with household income of $60,000 would see an additional $720 a year, or $60 a month, taken from their paychecks. But if it’s made retroactive, those same families would pay an additional $120 a month for the remainder of 2017.

Also unclear is the fate of Gov. Bruce Rauner’s reform measures. Rauner wants a property tax freeze that mirrors the length of any income tax hike. A four-year freeze proposed by Madigan includes exemptions for pensions and debt and would not apply to Chicago, Chicago Public Schools and several other at-risk school districts. Democrats also don’t seem open to a temporary income tax increase. Rauner also said he wants meaningful pension and workers’ compensation reform. Republicans have called Democratic measures on both watered down and “fake” reforms.

Today’s drama comes a day after a bipartisan vote in the House to amend the Democrat’s $36.5 billion spending plan that relies on tax increases. All House Democrats and 23 Republicans voted for the budget amendment.

Leaders on both sides of the aisle said there’s still plenty of work to be done.

“I think it’s a good step forward, a step that we can work upon. There’s much work yet to be done,” Speaker Michael Madigan said.

Lawmakers missed their original deadline of May 31 to pass a budget for the next fiscal year and they missed Friday’s midnight deadline as well.

After Friday’s action, Madigan sent bond ratings agencies a letter asking they defer judgement on a potential downgrade until the state gets a budget. Ratings agencies have threatened to downgrade the state to junk status if it doesn’t get a budget, which would further drive up interest rates on the state’s borrowing.

Ticket sales for multi-state Powerball and Mega Millions lottery games already have been suspended over concerns about the state’s ability to pay winners, and state road construction projects are being suspended because no funding has been appropriated.

It’s been two years since the General Assembly has passed an annual budget, yet much of the spending has been on autopilot because of court orders and consent decrees.

Illinois took another hit Friday when a federal judge said the state had to start paying more of its Medicaid bills each month. Federal Judge Joan Lefkow ordered that Illinois pay $586 million per month to its Medicaid system starting today. On top of that, Illinois Comptroller Susana Mendoza must pay $2 billion in backlogged bills over the next 12 months. Totaling roughly $753 million per month if the payments were dispersed evenly throughout fiscal year 2018, half of the payments will be matched by the federal government. Once matched, the final bill for Illinois will be about $4.5 billion.

Lawmakers are expected to take up a tax increase bill today.

“Much work has already been done on a revenue bill,” Madigan said.

He said meetings continue among interested parties “in an effort to finalize the revenue bill so that we can balance out spending versus revenue.”

House Minority Leader Jim Durkin, R-Western Springs, said he’s putting GOP votes on the spending plan that relies on more than $5 billion in new taxes.

“We are close,” Durkin said. “We are so close I can taste it.”

But his caucus wasn’t entirely on board. State Rep. Jeanne Ives, R-Wheaton, said the proposed budget continues to fund bad government behavior.

“This budget is a disaster, and this budget is the death knell for Illinois,” Ives said. “It tells every taxpayer who’s capable of moving from the state of Illinois it’s time to pick up stakes and leave. That’s what this budget does.”

Rep. David McSweeny, R-Barrington Hills, echoed Ives sentiments.

“Obviously, things are heading in the wrong direction,” McSweeney said Friday. “Today, the Republicans in the General Assembly raised the white flag to a massive tax increase.”

The proposed spending doesn’t address the state’s $15 billion bill backlog.

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