Illinois Legislature Passes Budget to Break Impasse -- Update

Illinois's Democratic General Assembly granted final passage Monday to state revenue and spending measures, sending to Republican Gov. Bruce Rauner a budget plan he has already pledged to veto.

Illinois entered its third fiscal year without a budget on July 1.

Mr. Rauner takes issue with the revenue side of the legislature's proposal, which levies a roughly $5 billion permanent income tax increase to fund the more than $36 billion spending bill. The state brings in roughly $32 billion a year.

The governor has said he would prefer the income-tax increase be temporary, and is seeking other concessions from Democratic lawmakers, including a property tax freeze and a revamp of the state's worker compensation system.

At the moment, it appears both chambers have the votes necessary to override the governor's threatened veto of the revenue bill.

The tax increase earned 72 votes in the House Sunday, surpassing the 3/5ths-majority threshold required to override a gubernatorial veto, and got 36 votes in the Senate Monday, the exact number needed to override Mr. Rauner's decision.

Fifteen Republicans voted for the tax increase in the House, and it earned one GOP vote in the Senate.

The state's record-breaking impasse is the result of a political standoff between Mr. Rauner, elected in November 2014, and House Speaker Michael Madigan, a Chicago Democrat who has held the office for more than three decades.

On Sunday, the House passed revenue and spending measures authored by Democratic Rep. Greg Harris, Mr. Madigan's top lieutenant in budget negotiations.

The Senate cleared both measures Monday, and gave final legislative approval to a budget implementation bill that would allow Illinois to borrow billions of dollars through the sale of state bonds. Those funds would go toward paying down the state's $14.6 billion in unpaid bills.

The revenue bill 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%. The spending bill includes a 5% cut to government agencies and reduces state higher education funding by 10%.

"We are faced today with the fierce urgency of now. We don't have any more time. And too late is not good enough," said Democratic Sen. Toi Hutchinson, who presented the revenue measure to the Senate. "It is time to be the independent legislature that our framers demanded."

But Republican Senate Minority Leader Bill Brady said he couldn't vote for the tax increase without legislation to enact the governor's demands.

"It's regrettable that I stand today not capable of supporting this package, not necessarily because what's in the package is bad, but because it's incomplete," Mr. Brady said. "We need a comprehensive solution for this state."

Ms. Hutchinson affirmed Democrats would remain at the negotiating table to keep working on property tax relief and workers' compensation reform, "but those things aren't at stake today. Our colleges and universities are at stake today. Our child care centers. Our mental health institutions," she said.

Talks on non-budget issues, including the governor's priorities, have deteriorated since the House revenue and spending votes Sunday. Mr. Brady and Republican House Minority Leader Jim Durkin failed to appear at legislative leaders meetings Monday and Tuesday with Mr. Madigan and Democratic Senate President John Cullerton.

(END) Dow Jones Newswires

July 04, 2017 13:30 ET (17:30 GMT)