A First in Years, Illinois Passes a Budget On Time

by | June 1, 2018

By Kim Geiger, Monique Garcia and Bill Lukitsch

Illinois lawmakers approved a spending plan on Thursday, putting the state on track to have a full budget in place ahead of the new financial year for the first time since Republican Gov. Bruce Rauner took office in 2015.

The House agreed to the $38.5 billion proposal by a 97-18 vote, following a landslide 54-2 tally in the Senate on Wednesday night. Rauner said in a statement he plans to approve it.

The overwhelming vote margins illustrated a consensus that neither Democrats who control the General Assembly nor Republicans allied with the governor wanted to go into the election season under the cloud of a budget stalemate like the one that consumed state government for nearly two years until last July.

They also reflected the changed dynamics at the Capitol, where Rauner for the first time focused on achieving a stand-alone budget rather than a broader deal that included his legislative agenda aimed at reducing regulations on businesses, freezing property taxes and reining in politicians' power.

Instead, the governor asked only for a budget that spends no more than the state takes in and requires no new taxes. That's what lawmakers say they are sending him -- a task made easier by several billion dollars from a tax hike that was passed last summer over Rauner's objections.

Left for another day were some of the state's most pressing financial problems: A backlog of unpaid bills that stands at $6.6 billion and a massive pension debt that's on track to consume a growing portion of Illinois' annual revenue.

Also set aside was Rauner's call for retirement system changes that he said could allow for a modest quarter-percent rollback of the state income tax. The plan projects $445 million in pension cost savings through voluntary buyouts, but it spends those savings rather than returning them to taxpayers via lower taxes.

Rauner, in a statement, praised the legislation as "a step in the right direction, though it does not include much-needed debt paydown and reforms that would reduce taxes, grow our economy, create jobs and raise family incomes." Still, he said he will "be taking action quickly to enact" the budget.

Lawmakers acknowledged that the plan was not designed to significantly change the trajectory of Illinois' troubled financial situation in the long term. But they touted the bipartisan compromise. For many Republicans, their "yes" votes on the budget bills were a career first.

"I can go back to my district and I can say that we have done our job for the first time in many years," House Republican Leader Jim Durkin of Western Springs said. "People in the state of Illinois continue to say, 'Can you please just work it out, get together, figure it out and get the job done?' And that's what we've done today."

Durkin said the budget was "not perfect," but "our priorities, the Republicans' and the Democrats', have been met."

"It's not a bad thing for us to compromise," Durkin said. "I want more of this."

Democratic House Speaker Michael Madigan, meanwhile, referenced his previous criticisms of Rauner's priorities as "extreme," saying that "while there is more work to be done, this compromise budget shows yet again that when extreme demands are not preconditions to negotiation, Democrats and Republicans in the legislature can work together to move Illinois forward."

The plan is based on an assumption that the state will bring in about $38.5 billion in the budget year that begins July 1, including $300 million from the long-stalled sale of the Thompson Center in the Loop. The total revenue estimate was boosted this year by the higher state income tax rate and changes to tax policies in Washington, D.C., plus unexpected spikes in investment returns.

Helping to clear the way for passage was $8.8 billion in spending approval for capital projects like construction of water, transportation and housing facilities, which would be paid for by borrowing and therefore aren't accounted for in the overall spending figures. Such projects can make it easier for hesitant lawmakers to cast "yes" votes, giving them so-called pork projects that they can tout in their districts. Often, though, such projects never materialize.

Lawmakers also approved $2.2 billion in spending on an infrastructure program Rauner announced earlier in the week. They granted him $53 million to cover the first-year costs of constructing a new veterans home in Quincy to address a deadly outbreak of Legionnaires' disease that dates to 2015 -- the handling of which has been a matter of controversy for the governor. And they set aside $500 million for an innovation center in the South Loop that's being led by the University of Illinois and has been heavily touted by Rauner.

The plan also preserves or increases funding for several important constituencies, giving a $50 million boost to early childhood education and an extra $350 million for K-12 schools -- a yearly increase that the schools were promised as part of a new state funding formula that was enacted last year.

And it looks to repair some of the damage of the budget wars of the past. Colleges and universities will see their funding increase by 2 percent, or $56 million. Child care providers will receive a 4.26 percent rate increase. And the Rauner administration will get $1.3 billion in supplemental spending to pay bills that have accrued over the past few years.

Still, as the House planned to vote on Thursday, Moody's Investors Service analysts warned that the state's fixed costs for debt service, retiree health care and pension contributions are on track to consume 30 percent of the money it brings in and that "a failure to adopt mitigating strategies soon will greatly increase the state's risk that these rising costs will become unaffordable without severe public service cuts."

And some lawmakers said they couldn't support the plan because it didn't do enough to address the long-term issues.

"The taxpayers of this state are getting killed and this bill ... continues the carnage," said Rep. David McSweeney of Barrington Hills, a Rauner critic who occupies the far conservative corner of the House Republicans. "We need to cut the budget. Math does count. We need to do real pension reform. ... We are insolvent."

Comptroller Susana Mendoza, a Democrat who controls the state checkbook, said the plan was far from perfect but a step in the right direction.

"We can't breathe easy yet," she said in a statement. "But having this stability and predictability will at least allow us to breathe."

(c)2018 the Chicago Tribune