CHICAGO - The Illinois House heads into its final week at an impasse over a fiscal 2015 budget after rejecting on Friday a budget stripped of more than $3 billion of income tax revenue.
The House rejected the budget in a 5-107 vote that came two days after House Speaker Michael Madigan, D-Chicago, said he had only 34 of the 60 votes needed to make permanent an expiring income tax hike needed to support Gov. Pat Quinn's proposed $38 billion spending plan.
Madigan ordered committees back to work on Wednesday but the quick vote on across-the-board cuts in discretionary funding surprised some on Friday, and there was just limited debate allowed.
"There's a magic number out here folks after today, we have six days to come up with a budget," said state Rep. Fred Crespo, D-Hoffman Estates. "This is a factual bill, this is based on the assumption that the tax bill goes away."
Republicans charged the speedy vote on general cuts over a more thoughtfully crafted reduction plan was aimed at drumming up Democratic votes.
The House earlier this month passed spending bills totaling at least $37 billion on the premise that the extension of temporary income tax increases championed by Quinn would eventually clear.
Quinn lobbied his fellow Democrats May 19 but was not able to garner support for making permanent the tax rates that begin to roll back on Jan. 1, midway through fiscal 2015.
The Senate, where there's more support for making permanent the tax rates, has been waiting on the House to act first. Senate Democratic leaders said this week there's little support for a budget with deep cuts. If the tax rates are allowed to roll back, legislators estimate there's just $34.5 billion available.
The current personal income tax rate of 5% will fall to 3.75 % unless lawmakers approve a change. The rate was raised from 3% in 2011. The corporate rate is scheduled to fall to 4.8% from 7 %.
Some rating agency comments have said the continuation of the temporary taxes, along with pension reforms enacted in December which are the subject of a legal challenge, could prevent any further deterioration of Illinois' A-minus level credit ratings.
Standard & Poor's, which has a "developing" outlook on Illinois, warned in a recent report that a budget "reductions of the magnitude" called for in a budget without the higher tax revenues "could be difficult to achieve and might lead to year-end budget deficits and higher payables." Fitch Ratings and Moody's Investors Service assign negative outlooks.
Before adjourning Friday, the House passed a resurrected and revamped millionaire's tax proposal. The House in a 64-46 vote approved placing an advisory referendum on the November ballot. If the Senate approves, the measure would ask voters whether the state constitution should be amended to impose a 3% surcharge on income of more than $1 million. Madigan previously proposed asking voters to approve a constitutional amendment on the issue but it stalled.
Lawmakers are scheduled to adjourn May 31.
