DALLAS—Illinois lawmakers convened this week at the state's capital to negotiate a stop-gap spending plan to fund schools and other services before the fiscal year starts July 1.
Illinois is perilously close to starting a second fiscal year without a budget, after winding up the regular spring session on May 31 without a balanced budget in place.
On Tuesday lawmakers, including House Speaker Michael Madigan, D-Chicago, said that progress was being made with budget negotiations. "I'm optimistic," Madigan said after a Tuesday meeting with Rauner. "It appears to me that everyone that's in the negotiations is negotiating in good faith. There are a lot of proposals on the table, a lot of good ideas."
Illinois Gov. Bruce Rauner said on Monday that an agreement is near on funding operations, but Madigan and Senate President John Cullerton, both Chicago Democrats, plan to oppose the proposed measures unless the funding formula changes and Chicago Public Schools get more money. CPS is grappling with a $1.1 billion deficit.
The package of interim bills pitched by the GOP would provide some near term relief by appropriating the remaining non-general revenue fund line items for the current fiscal year and use the state's rainy day fund to pay outstanding bills at various state agencies. The package of bills funds utilities, food and medical services at state prisons and other facilities, dipping into a human services fund for $458 million.
For fiscal 2017, it would fund early childhood and K-12 education; appropriate the fiscal 2017 road construction program paid for with motor fuel tax and vehicle registration fees and appropriate all federal funds.
It would appropriate non-general revenue funds for capital projects that were halted in mid-construction due to the lack of a budget and cover emergency repairs at state facilities.
It would also provide the appropriations needed to free up the tourism-related tax revenue that covers debt service payments for the MPEA and appropriations needs for the state's Civic Center bonds and Illinois Sports Facilities Authority bonds.
The interim package would provide $600 million from the Education Assistance Fund for Higher Education and appropriate $180 million from a human services fund to cover payments to human services providers not covered by court orders or consent decrees in fiscal 2017.
Meanwhile CPS is scheduled to make a $669 million pension payment by Thursday that would leave the school districts with only $24 million in the budget to cover day to day operations, according to the Chicago Tribune.
CPS has yet to release a 2017 budget and the school district has not announced a date when the budget will be released.
Although the school district is on track to close out the fiscal year June 30 with $24 million of cash in the bank, that's only because it's fully tapped $870 million of existing credit lines set to expire in August. If not for the credit lines, the district would end the year with an $846 million negative balance. CPS has not announced if it has secured new short term credit lines.
A plan for the city of Chicago to request approval to begin purchasing, among other things, junk rated CPS debt has been scrapped, according to city spokeswoman Molly Poppe.
On Monday, Chicago Mayor Rahm Emanuel was reportedly seeking city council approval to expand the city investment rules to allow it to buy tax anticipation warrants, municipal bonds, notes, commercial paper or other instruments representing a debt obligation from sister agencies, including the Chicago Board of Education, the Chicago Housing Authority, the Chicago Park District, the Chicago Transit Authority, and the City Colleges of Chicago.
"[The Administration] does not plan, at this time, to move forward with the sister agency piece of this ordinance as currently written," said Poppe. "The Administration's focus is ensuring we receive the best possible return on short-term investments for our taxpayers, while preserving our principal."
Fitch Ratings, Standard & Poor's, and Moody's Investors Service have the district deep in speculative-grade territory with single-B level ratings. The district's last deal, which priced in February, received a BBB rating from Kroll Bond Rating Agency, which rates other CPS bonds BBB-minus.
In June Moody's downgraded Illinois' credit rating by two notched to Baa2. S&P Global Ratings lowered the state's ratings to BBB-plus from A-minus. Both assign negative outlooks. Fitch Ratings rate Illinois at BBB-plus and has place the credit on negative watch.
