Illinois Budget Talks Hit Rocky Patch

By Quint Forgey Features Dow Jones Newswires

Prospects for a swift resolution to Illinois's budget crisis are growing bleaker, with House lawmakers expected to vote along party lines to reject a Democratic revenue bill Sunday meant to fund a spending measure the chamber voted to support Friday.

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During its record-breaking fiscal impasse, the state has racked up $14.6 billion in unpaid bills, and bond houses are warning the state's credit rating could be downgraded to junk status.

A federal judge Friday found Illinois noncompliant with its Medicaid payments, ruling the state must pay $293 million a month and $1 billion over the next year to help reduce the $3 billion it owes to health-care providers.

The logjam is the result of a political standoff between Republican Gov. Bruce Rauner, elected in November 2014, and House Speaker Michael Madigan, a Chicago Democrat who has held the office for more than three decades.

Gov. Rauner called a 10-day special session to solve the budget mess before the start of the fiscal year on July 1. But the governor and lawmakers were unable to broker a deal before midnight Friday, leaving the General Assembly working overtime as the state entered its third fiscal year without a budget.

Democratic Rep. Greg Harris, Mr. Madigan's top lieutenant in budget negotiations, authored the revenue measure expected to be debated Sunday. It increases the state's personal income-tax rate from 3.75% to 4.95% and the corporate income-tax rate from 5.25% to 7%.

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The proposal is largely in line with a similar Republican plan to raise revenue, but Gov. Rauner favors only a temporary increase in income taxes -- not the permanent hike outlined in Mr. Harris's bill.

GOP lawmakers are also frustrated by last-minute amendments Democrats made Sunday to the spending plan the House tentatively approved Friday.

The new version of the Democrats' proposal would spend roughly $400 million less than the plan lawmakers voted to support Friday, and include an increase in cuts to state higher education funding to 10% from 5%.

"We have no idea what's in [the spending bill]," said Republican House Minority Leader Jim Durkin. "To take a tax increase vote before knowing exactly what you're spending, to me, is irresponsible. I don't know if we're going to see the new budget vote today."

Mr. Madigan is expected to force the tax vote on Sunday after previously announcing no budget bills would be called before Monday. On the House floor Saturday, he said chief negotiators for state appropriations, revenue and workers' compensation issues would continue talks through the weekend.

The announcement drew a rebuke from Mr. Durkin, who rallied his Republican colleagues Friday in support of a $36.5 billion Democratic spending plan backed by Mr. Madigan.

House members merely voted Friday to adopt the spending plan as an amendment to another bill, so it will need another vote of approval from the full chamber before heading to the Senate.

Write to Quint Forgey at quint.forgey@wsj.com

(END) Dow Jones Newswires

July 02, 2017 17:59 ET (21:59 GMT)