The budget is “unbalanced and therefore unconstitutional,” said Illinois Gov. Bruce Rauner.

CHICAGO - Illinois Democrats warned that Republican Gov. Bruce Rauner's veto Thursday of all but education spending bills in the fiscal 2016 budget moves the state closer to a partial governmental shutdown.

Rauner vetoed 19 budget bills, sending them back to the General Assembly. The vetoes came a day after he signed public education funding bills.

"For far too long, the state of Illinois has made spending promises that exceed available revenues. I cannot approve a budget that violates this fundamental principle," Rauner said. The budget is "unbalanced and therefore unconstitutional," he said.

"Because of past fiscal mismanagement, Illinois is experiencing the worst fiscal crisis in America, highlighted by Illinois being assigned the worst credit rating of any state," he said. Illinois carries the lowest rating among states at the A-minus level across the board and rating agencies have warned of further credit deterioration absent progress on structurally balancing the budget or reining in growing pension obligations that top $100 billion.

Rauner's veto message was released simultaneously with the announcement of compromises the administration says it's now willing to make on legislation proposals in his "turnaround agenda" that have driven the stalemate over a new state budget.

Rauner also held out hope for both short-term relief and long term solutions to the pension woes plaguing Chicago, Chicago's school system, Cook County, and local government public safety funds across the state.

The freshman GOP governor's veto of most of the budget was not a surprise as he had warned that the package of bills totaling $36.3 billion falls $4 billion short of the revenue needed to pay for it. Democrats contend it's closer to $3 billion. Lawmakers acknowledge the shortfall and had hoped to reach an agreement on new revenues but Rauner won't consider that option unless items on his legislative agenda are approved. Democrats have so far refused.

Earlier in the day, House Speaker Michael Madigan, D-Chicago, announced a committee-of-the-whole session next Tuesday to discuss the impact of a potential shutdown. After Rauner's vetoes, Democrats sought to put the blame on the governor for any disruption if the state enters the new fiscal year July 1 without a budget.

"It appears that the governor would rather move the state toward a shutdown rather than reasonable compromises that protect the middle class with a balanced approach to budgeting. The Senate President will take some time to discuss all options and next steps with his caucus," said Rikeesha Phelon, a spokeswoman for Senate President John Cullerton, D-Chicago.

"It seems the Governor missed an opportunity to avoid disrupting the lives of many, many middle class families for the sake of non-budget issues," Madigan said in a statement. "These non-budget issues that have been thoroughly debated. Some were adopted by the House. Others were rejected when there was no persuasive case made."

Democrats did not disclose their next step, which could include an override attempt. Democrats enjoy a three-fifths super majority which is needed for an override. The lack of a budget doesn't jeopardize debt service as it continues to be paid under a continuing appropriation.

With lawmakers and Rauner stuck on turnaround agenda items, the governor is now offering to compromise. He is willing to limit his proposed local government property tax freeze to two years.

Rauner says he also willing "at the request of Senate President Cullerton" to reform the school funding formula as part of the freeze. A commission would report back on recommendations by the end of next year.

As part of the compromise, the state would pay what's known as the normal costs for Chicago teacher pensions, as it does for all other school districts, in exchange for sunsetting Chicago's special block grants, Rauner said in an op-ed piece published by the Chicago Tribune.

"We have the opportunity now not only to turn around Illinois but also put Chicago and its school system on a sustainable path," he said.

Rauner did not offer compromises on worker's compensation and tort reform proposals, but he did offer a compromise on the timing of term limits and redistricting changes he is seeking. He now wants a commitment from Democrats to vote on sending them to the ballot in the next 10 months.

Rauner offered carrots and sticks to Chicago, Cook County, and local governments on pension reform. Rauner wants to craft a sweeping reform package modeled in part on a Cullerton proposal that offers employees a choice, and the pension overhaul model he proposed in his own budget that cuts benefits going forward.

"In the compromise, we are willing to support Cook County's pension reform plan and allow Chicago and downstate communities to implement longer, slower pension payment schedules," Rauner said. Lawmakers recently approved a measure that extends by 15 years the time Chicago has to get its public safety funds to a 90% funded ratio as required by state law. It trims a $550 million spike in the city's 2016's contributions by more than $200 million.

"Pension reform is not a prerequisite to signing the budget, but it should be completed this year. I'm committed to it, and I ask for the legislative leaders to be equally committed," Rauner said.



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