CHICAGO – Illinois Senate Democrats garnered mixed results with votes Wednesday on most pieces of the “grand bargain” legislative package to end the state's budget impasse.

A handful of the bills passed, some with GOP votes. Some were approved with little or no GOP support and others failed, as Republican senators said more negotiation is still needed.

“I was under the impression we had reached an agreement on the budget…why did the Republicans not vote for the budget?” Senate President John Cullerton, D-Chicago, said after the day’s session ended.

Illinois Senate President John Cullerton, D-Chicago
Illinois Senate President John Cullerton says time is running out to move bills aimed at breaking the state budget impasse.

“The defeat of some of these bills today will not defeat our goal of reaching an agreement,” said Sen. Bill Brady, R-Bloomington. “There’s always theater here in the capital…we’re optimistic that today’s theater will bring us together.”

Whether the advancing bills and ongoing negotiations will result in a final deal that breaks the nearly two-year-old budget deadlock remains uncertain. The package’s prospects in the House are unknown as House Speaker Michael Madigan, D-Chicago, has floated his own ideas and remains opposed to many of the governance and policy items Gov. Bruce Rauner is pushing in exchange for tax hikes.

While Republicans attacked the push forward on voting without final agreements, Democrats said action is needed now with a May 31 session deadline looming.

“We are out of time,” said Sen. Heather Steans, D-Chicago, sponsor of the budget appropriation bill. Without action, the state is headed toward “junk bond status.”

Rating agencies have warned that Illinois’ ratings -- already the lowest among states at the Baa2/BBB level -- faces another downgrade without a break in the impasse and progress toward stabilizing state finances.

Negotiations are continuing in an attempt to bridge remaining political differences over parts of the package including the length of a local property tax freeze. Cullerton said he expected action Thursday on worker’s compensation reforms. Budget talks also are continuing.

Bills that would authorize spending for the remainder of fiscal 2017 and 2018, expand gambling, overhaul the state’ school funding formulas, authorize short term borrowing to pay down the bill backlog, reform procurement rules, and promote local government consolidation passed.

A local government property tax freeze and the budget implementation bill known as BIMP failed.

Cullerton took a new approach in moving the bills forward from prior attempts. All of the bills were previously linked so all needed to pass for any one of them to take effect. On Wednesday, the bills were amended to stand on their own.

On the Republican side, senators dropped their prior position opposing all bills, even those that had been finalized in negotiations part of their stance to bring the whole package to the floor at once. On Wednesday, they voted for bills with final agreements in place.

Senate Bill 1 to overhaul state kindergarten through 12th grade spending passed without GOP support. Under the proposal, the state would shift to an evidence-based model for funding schools based on an individual district’s profile. A base of fiscal 2017 funding levels would be set.

The bill requires the state to provide $215 million in pension help for Chicago Public Schools for fiscal 2017 and going forward the state would cover the “normal costs” of CPS pensions as it does for all other districts while CPS would remain responsible for payments tied to the unfunded liabilities.

Some GOP lawmakers attacked the plan saying it favors CPS over other districts because it preserves special grant block funds that were originally awarded as compensation for the pension funding differential between CPS and other districts.

Rauner’s education secretary, Beth Purvis, slammed the bill.

“This bill is not consistent with the framework of the bipartisan, bicameral School Funding Commission” and it forces “a Chicago bailout at the expense of every other school district in the state, some of which are in worse financial straits than CPS.”

Senate Bill 3, to pave the way for local government consolidation and make it easier to abolish some local township governments, was approved with bipartisan support.

Senate Bill 4, which authorizes $7 billion of seven year general obligation notes to help pay down the state’s bill backlog won the supermajority vote needed for new GO bonding, all from Democrats. The reported bill backlog jumped from $13 billion to more than $14 billion Wednesday. SB 4 would also allow the Illinois Finance Authority to issue $250 million in bonds to fund payouts under a separate bill with pension reforms.

Senate Bill 6 to authorize spending for the second half of fiscal 2017 and fiscal 2018 passed with only Democratic support. For fiscal 2018, it would authorize $36.5 billion of general fund spending for school districts, universities, human service and state operations. It’s balanced with $3.8 billion in cuts, savings, and tax hikes. The GOP withheld support as a final agreement had not yet been reached.

A big obstacle is that a later vote on Senate Bill 42 – what’s known as the BIMP or budget implementation bill -- failed. The GOP withheld support and Democratic votes fell short.

Senate Bill 7 to expand gambling passed with bipartisan support. It would grant six new casino licenses including one for Chicago, allow slot machines at racetracks, and expand slots and tables at the existing 10 casinos.

Senate Bill 8 to reform state procurement rules passed on a bipartisan vote.

After the BIMP failure, Cullerton did not call for a vote on Senate Bill 9, to authorize more than $5 billion in new and increased taxes.

The personal income tax rate would rise to 4.95% from 3.75% to generate $4.4 billion annually. After seven years, it would drop back to 3.75%. The corporate income tax rate would go up to 7% from 5.25% for seven years and is projected to generate $514 million more annually. Three corporate tax loopholes would be eliminated to generate $125 million annually. Other changes in tax rebates and breaks would generate $164 million annually. The state’s sales tax would be extended to some services currently exempt, generating about $149 million annually. New and increased tax credits would cost the state $264 million.

Senate Bill 16 to overhaul state pension funding passed with bipartisan support.

The centerpiece uses Cullerton’s so-called “consideration model” which he believes will pass state constitutional muster where other reforms have failed, because employees are offered a choice and benefits to offset the negative impact of cost-of-living adjustment changes. Similar bills cleared a House committee earlier this week. The state isn’t counting on any savings in fiscal 2018 given a threatened legal fight but if upheld the changes could save $700 million to $1 billion annually.

A vote may come Thursday on Senate Bill 198 to overhaul the workers compensation system.

Senate Bill 478 to freeze local property taxes for two years failed. It remains a key sticking point, with Rauner and Republican senators pushing for a longer freeze. Increases would require voter approval. Extensions for debt service and pensions would be exempt from the freeze. School districts with financial hardships could apply for an exemption and CPS would be exempt. “A simple two-year freeze is inadequate, and there’s been some other really good ideas floated out there that again I think we can come to closure on if we gave ourselves a little more time to do it,” said Minority Leader Christine Radogno, R-Lemont, co-author of the “grand bargain” along with Cullerton.

Senate Bill 10 and a de-linked version SB41 passed last week. The bill would create a new borrowing vehicle for local home rule units of government that allows them to leverage their share of taxes received from the state.

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