Illinois House members return to the state capital this week as Democrats and the new GOP governor are locked in a budget impasse.

CHICAGO — Illinois Gov. Bruce Rauner told his cabinet Wednesday the state must prepare for operating and cash flow challenges if a stalemate over the fiscal 2016 budget isn't resolved.

Rauner's opening remarks to his cabinet were broadcast, an occasion he used to keep up his attacks on the General Assembly's Democratic majority for passing a fiscal 2016 budget that falls at least $3 billion short of needed revenue and its refusal to take up his "turnaround agenda" proposals.

"We have very difficult jobs, challenges ahead," Rauner told cabinet members. "This puts us all in a bind because the reality is we don't have a budget today, a constitutionally balanced budget and we have a team in the General Assembly who so far is unwilling to compromise."

"We are going to be facing very serious operating and cash flow challenges," Rauner said, and the state must prepare contingency plans "and get ready for the very possibility that we are facing a cash crisis."

Rauner proposed deep cuts to eliminate a $6 billion deficit in the budget covering the fiscal year that begins July 1, and tied his support for any tax hikes to Democratic support for a scaled-down version of his turnaround agenda. He is seeking a local property tax freeze, caps on civil judgments, worker's compensation reforms and constitutional amendments on term limits and redistricting.

Democrats rejected many of those proposals during committee hearings and argued that the budget process should stand on its own. They passed their own general fund plan before adjourning, acknowledging the $36 billion plan is at least $3 billion short on revenue. They have attacked Rauner's $32 billion spending plan as imbalanced because it relies on $2.2 billion from pension reforms that the governor now acknowledges may not be able to withstand a legal challenge.

House Speaker Michael Madigan, D-Chicago, called members back to work for a Thursday session to consider workers' compensation reforms in the form a bill crafted by Democrats.

"As we have said previously, we're willing to work with and compromise with Gov. Rauner on any number of issues, and this proposal to reform the system of assistance for workers injured on the job will show that," Madigan said in a statement. "The governor stated he believes this is one of the top issues, so we want to help him address it."

Rauner rejected the proposal labeling it as "phony" and warned that it could potentially cost businesses more. "This makes us less competitive," he said. The legislation, which passed along party lines. The measure simply codifies existing interpretation of the law for legal purposes, critics say. 

 

Rauner bashed Madigan, saying he believed some Democrats might embrace his proposals if not for their fear of angering the head of the state Democratic Party, who controls the party's purse strings.

Rauner said he met earlier in the day with Chicago Mayor Rahm Emanuel and called it a constructive meeting even as the governor expressed disappointment over legislation approved by the Democratic majority at Emanuel's behest that gives the city more time before it begins contributing to its public safety pension funds on an actuarial basis.

"We've seen this movie before" on deferring pension obligations, Rauner said, adding he hopes in the next couple weeks work can begin on a new package of state pension reforms to replace ones thrown out by the Illinois Supreme Court last month.

Rauner also said his administration would continue to announce cost-saving measures. On Monday, he targeted some tax credits, land grants, state police vehicle purchases, juvenile correctional centers, and state museums for cuts. He also nixed the proposed public-private partnership Illiana Corridor toll project. Those and other cuts are aimed at saving $400 million.

Rating agency analysts and investors are watching closely to see how the state resolves its budget mess. Illinois is the lowest rated state at the A-minus level.

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