Illinois House approves state budget, ends historic impasse

SPRINGFIELD, Ill. – The Illinois House voted Thursday to override Gov. Bruce Rauner’s vetoes of a budget package, giving the state its first spending blueprint in more than two years and ending the nation’s longest fiscal stalemate since at least the Great Depression.

Lawmakers have been meeting in a special session called precisely to deal with the budget. The session was widely seen as a battle between the first-term governor, a former private equity investor, and longtime Democratic House Speaker Michael Madigan of Chicago.

The budget is retroactive to July 1 – the start of the fiscal year. That’s the date a permanent 32 percent tax increase takes effect. Individuals will pay 4.95 percent instead of 3.75 percent. The corporate rate jumps to 7 percent from 5.25 percent.

Lawmakers approved the bill to raise taxes by a 71-42 vote. The spending bill passed 74-37. It takes 71 yes votes to override.

Rauner vetoed the measures because he sees no indication that the Democratic-controlled Legislature will send him the “structural” changes he’s demanded. Those include a statewide property tax freeze, cost-cutting restrictions on compensation for injured workers, changes to pension benefits for state employees, and reforms making it easier for voters to merge or eliminate local governing bodies.

The standoff, which entered a third fiscal year on July 1, had potentially disastrous side effects statewide. The state has a $6.2 billion annual deficit and $14.7 billion in overdue bills.

As a result, road construction work shut down. Public universities were cut to the bone and faced a loss of academic accreditation. The United Way predicted the demise of 36 percent of all human-services agencies in Illinois by year’s end.

Credit-rating houses threatened to downgrade the state’s creditworthiness to “junk,” signaling to investors that buying state debt is a highly speculative venture. Two agencies gave Illinois some breathing room Monday after House votes over the weekend.

But on Wednesday a third credit-rating agency, Moody’s Investors Service, put Illinois under review for a downgrade even if lawmakers overrode the veto. Moody’s said that while lawmakers have made progress, the package the House will consider Thursday does not address the state’s massively underfunded pensions or do enough to pay down bills.

At least a few House Republicans remained defiant and pledged to vote against the governor, whose massive personal wealth has largely funded the state Republican Party.

Rep. David Harris of Arlington Heights said he supported the budget plan because it is “immoral” for the state to carry a huge backlog of bills and pay $800 million in late-payment interest.

He compared the standoff to a game of “chicken.”

“If it requires some of us to blink to save our state, so be it,” said Harris.

The governor already faces several Democratic heavyweights hoping to displace him in the 2018 election.

Government has limped along for two years on the strength of court-ordered spending, but the state comptroller says the treasury will be $185 million short of what’s needed to cover basic services by August.