Illinois's Republican governor vetoed a budget plan that gained final approval from the Democratic General Assembly earlier Tuesday. But less than an hour later, the state Senate overrode his veto of the three bills in the package.
The budget now heads back to the House for an override vote as early as Wednesday. If that chamber successfully overrides Gov. Bruce Rauner's veto, the legislature will have enacted the state's first budget in more than two years.
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No other U.S. state has gone without a budget for more than a year since the Great Depression.
"The package of legislation fails to address Illinois's fiscal and economic crisis -- and in fact, makes it worse in the long run," Mr. Rauner said in his veto message to the legislature. "Budgets in Illinois won't be balanced or stay balanced unless our economy grows faster than our government spending. We have been ignoring that truth for 35 years."
The state's impasse is the result of a political standoff between Mr. Rauner, elected in November 2014, and longtime House Speaker Michael Madigan, a Chicago Democrat.
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 the House has the votes necessary to override the governor's vetoes.
The tax increase, the most contentious part of the budget, earned 72 votes when it passed the House on Sunday, surpassing the three-fifths-majority threshold required to override a gubernatorial veto. Fifteen House Republicans voted for the tax increase. The Senate overrode the governor's veto of the revenue measure with the minimum number of required votes Tuesday.
Democratic Rep. Greg Harris, Mr. Madigan's top lieutenant in budget negotiations, wrote the revenue and spending measures that cleared the House this weekend.
The Senate passed both measures Tuesday, 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 overhauls, "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 nonbudget 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.
Following the Senate's approval of the budget plan, Mr. Madigan confirmed he wouldn't call a vote in the House on Tuesday to override the governor's veto if Mr. Rauner rejected the budget later that day.
(END) Dow Jones Newswires
July 04, 2017 16:43 ET (20:43 GMT)