CHICAGO – Illinois House and Senate Republicans laid out their formal legislative package aimed at ending a two-year-old budget impasse that will likely drag at least one of the state’s ratings down to junk if not resolved by July 1.
“The bills we are filing today include many provisions Democrats have said in the past they are willing to accept taken as a whole and that we believe would be signed by the governor,” said House Minority Leader Jim Durkin, R-Western Springs, said at a news conference Wednesday.
The plan from GOP legislative minorities comes after efforts to bridge the differences between the legislature’s Democratic majorities and Gov. Bruce Rauner and his fellow GOP lawmakers quieted down following the end of the formal spring legislative session May 31.
On June 1 Moody’s Investors Service and S&P Global Ratings dropped the state one notch to the lowest investment grade level of Baa3/BBB-minus. S&P said it’s likely to act again if the state enters the new fiscal year without making progress on stabilizing its finances.
Fitch Ratings is also expected to act when the new fiscal year begins but it’s unclear whether it will take the state’s rating down one notch from BBB to BBB-minus or drop it to junk. In the meantime, the state’s public universities and transit agencies have been hit with downgrades, all due to the budget stalemate.
The package unveiled Wednesday includes seven pieces that include a budget and various reform measures demanded by Rauner. The legislation imposes a local property tax freeze, outlines worker’s compensation reforms, local government consolidation, an overhaul of education funding formulas, term limits, and pension changes.
Some are similar to what’s cleared the Senate but budget details and a demand for a four-year property tax freeze veer from what Senate Democrats support. The House did not vote on the Senate Democratic budget and Democrats have not offered a new version. The House did vote on few pieces of the package, previously referred to as the “grand bargain.”
The new GOP plan proposes a $36 billion general fund budget – down from the Senate Democrats’ $37 billion plan -- with a hard cap on spending for four years. It cuts $5 billion in costs through spending reductions and pension changes. That’s $2 billion more than Senate Democrats approved. Transit and local government funding would be cut and the state would dip into non general funds. The budget includes plans to pay down $4 billion of the state’s nearly $15 billion bill backlog.
The GOP said it would accept the roughly $5 billion in tax increases approved by Senate Democrats but they want to sunset the income tax rate hike in four years to match a four-year local property tax freeze.
The GOP also wants revenue hikes to take effect July 1 instead of the retroactive Jan. 1, 2017 date in the Senate Democrats’ budget.
The GOP characterized many of its counteroffers as a “compromise” including plans in the package to add $250 million in education funding and increase spending on other human services programs. The pension changes include help sought by Chicago Public Schools to bring it in alignment with aid other districts get in covering teachers’ pension payments.
Democrats reacted coolly and suggested it was overdue that the GOP formally laid out a plan, instead of shifting demands to reach a compromise.
“It’s going to require bipartisan compromise to get to a balanced budget signed into law and get Illinois out of this situation. That’s the reality now that the May 31 deadline passed,” said John Patterson, spokesman for Senate President John Cullerton. “We hope this is a serious, real step toward that compromise by House and Senate Republicans. But a Republicans-only, mid-June news conference doesn’t exactly scream bipartisan compromise.”
Patterson also stressed that Senate Democrats had laid out and approved a package and attempted to negotiate a compromise only to be rebuffed by Rauner on several fronts.
“If and when bills or amendments are introduced House will review and consider,” said Steve Brown, a spokesman for House Speaker Michael Madigan, D-Chicago.
Madigan also dug in Wednesday on his opposition to Rauner’s reform demands. After a hearing on budget issues, Madigan said: “Where we can compromise with the governor without hurting middle-class families, we’ve worked to find common ground,” Madigan said. “Working families, the elderly, students and their parents and so many more are being directly harmed by Governor Rauner’s budget crisis.”