CHICAGO - The Illinois General Assembly entered this final week of its spring session with its Democratic leadership now focused on crafting a budget that doesn't rely on revenue from an expiring tax hike but also avoids deep cuts.
"We're proceeding under the expectation that the income-tax increase will not be extended," said House Speaker Michael Madigan, D-Chicago, calling the new budget plan being crafted a "middle-of-the-road" plan.
"Our goal is to adopt a 12-month budget consistent with revenue estimates," he said.
The plan lacks revenue from the expiring taxes but also lacks the deep cuts rejected by the House last week.
The new budget would fall somewhere between the $38 billion plan Gov. Pat Quinn proposed assuming a temporary 2011 income tax hike would be made permanent, and a plan with about $3 billion less in revenue that was soundly rejected by the House on Friday.
That budget was labeled the "doomsday" plan.
Although the House had previously adopted a general fund that reflected Quinn's plan, the vote came before lawmakers approved legislation making permanent the tax hike. It begins to expire midway through the next fiscal year on Jan. 1. Madigan last week said he had only about half of the votes needed to pass the tax extension.
Madigan said late Monday the new version of the budget would reflect revised revenue estimates and spending adjustments and could rely on additional interfund borrowing. He did not put a figure on the final size of the general fund expected to come up for a vote before the session ends this week.
The original House estimate of available revenue without the tax extension was $34.5 billion. Lawmakers have since revised revenues upward by $189 million. Madigan said education spending would be held flat, avoiding the deep cuts Quinn has warned are needed without the tax extension.
Senate Democratic President John Cullerton, D-Chicago, also opposed the deeper cuts of the "doomsday" budget, and is now working with the House on a revised spending plan.
"We have collaborated with the House to build the budget. The effect of this budget approach delays doomsday scenarios through borrowing and increasing our backlog of bills," Cullerton spokeswoman Rikeesha Phelon said Tuesday.
Quinn's office said it would continue to press lawmakers to support the tax extension. 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.
After May, adoption of any budget would require a two-thirds majority, not a simple majority. The Republican minority has signaled that it would not go along with Quinn's tax extension plan.
Lawmakers could return in January, after the November general election, and revise it when only a simple majority would be needed.
