Illinois House Democrats Propose Own Budget Plan

Illinois lawmakers have a new spending plan to consider, the state’s four top legislators privately met for the second time this year, and Democrats are prepared to advance a series of plans that respond to Gov. Bruce Rauner’s “turnaround agenda” wish list.

The flurry of movement at the capitol on Tuesday could signal an end to the years-long gridlock that stands to lead to chaos if it goes unresolved once July and a new fiscal year hit; but the action could also be a show, designed to further pin fault.

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“This is a governmental negotiation, and I think you all know that in governmental negotiation like in negotiation in most other areas, nobody gets 100 percent,” House Speaker Michael Madigan said, as he encouraged Republican Senate Leader Christine Radogno and House Minority Leader Jim Durkin to “persuade the governor to be reasonable.”

Madigan’s House Democrats much-anticipated spending plan spends roughly $36.5 billion, which is less than the $37 billion spending plan advanced by Senate Democrats in May, less than the $37 billion budget Rauner himself proposed early this year, and less than the $39 billion Illinois is on track to spend this fiscal year.

Even so, Rep. Greg Harris, D-Chicago, says it increases spending in areas like education (which sees a $350 million bump) and early childhood ($15 million). Workers paid by the state to provide in-home care for the elderly and disabled would see their wages rise. Low-income workers would pay less in taxes through an increased Earned Income Tax Credit.

Under the plan, Harris says the state would once again fund welcoming centers for immigrants and refugees, funding for autism, respite and epilepsy care would be restored, and Illinois would pay for HIV/AIDs treatments and cervical cancer screenings “as a cushion for what might happen in Washington” should President Donald Trump’s health care plan pass.

The House Democrats’ proposal (Senate Bill 6) would cut higher education, though by 5 percent—half the cut as proposed in the other versions.

To provide for all of that, the plan seeks to cut state agencies by 5 percent nearly across the board and reduce Rauner’s IT modernization efforts.

“I’m not saying that this is perfect. I’m not saying that it meets every request of the governor. But I think that it goes a long way toward giving the state of Illinois a good solid spending plan that responds to the real needs of the state, the real needs of the people of the state,” Madigan said.

Republicans didn’t dismiss the proposal outright, as they said it was impossible to judge whether it is actually balanced: There was no revenue measure to match the spending. (The so-called “Capital Compromise” that Republicans are pushing likewise skipped including a politically-thorny revenue bill).

“Based on (Democrats’) past actions, I can’t take their word that this is a balanced budget,” Durkin said.

Harris says House Democrats’ goal is to “live within the confines” of the tax hike Senate Democrats approved in May, which raises the personal income tax from 3.75 percent to 4.95 percent.

Still undetermined, however, is whether the tax could go higher, as Illinois looks for funding to pay for services that received no money these past six months. There’s also widespread talk about borrowing money to pay back Illinois’ $15 billion backlog of overdue bills; Illinois is paying a 12-percent interest rate for that. The idea would be to borrow at an interest rate of less than half of that, thus saving money in the long run. But such borrowing would likely require a dedicated funding source.

Other tax questions remain. Republicans, for example, want a four-year, temporary income tax increase paired with a four-year freeze on local property taxes. The Senate plan (Senate Bill 9) calls for a permanent income tax increase.

“They will not show their cards on that,” Durkin said of Democrats.

Durkin says he will have a “challenging” time getting enough Republicans to back a permanent hike.

Also unclear is whether any revenue package will add a sales tax to services like dry cleaning and lawn care – a move that the Illinois Chamber of Commerce and state revenue department say could raise legal issues because it discriminates by subjecting some services to the tax and not others.

While the budget itself is taking center stage, the impasse has largely been predicated on Rauner’s requirement that Democrats pass a series of measures he says will make the state more competitive, but which Democrats say are designed to prop up businesses at unions’ and middle class families’ expense.

Madigan says such matters shouldn’t be a precondition to a budget, but in a nod to Rauner, four Democratic bills matching the governor’s priorities – a property tax freeze, workers’ compensation overhaul, reduction in state employee pension benefits, and a path toward local government consolidation – are poised for votes in the House on Wednesday.

Durkin, however, says that will hurt, not help, a compromise, given that bipartisan negotiations are underway and Republicans aren’t on board with what Democrats have introduced.

Democrats say they’ve met Republicans more than halfway by proposing a four-year property tax freeze, when they’d originally backed one that would last half that time.

But Republicans are upset that Senate Bill 484 has exemptions for financially struggling schools including Chicago Public Schools and for municipal pensions, and that it does not include provisions that would more easily allow for voter referenda to raise or lower property taxes at the end of the freeze.

Republicans likewise have concerns with new demands Madigan on Sunday announced would be a precondition to Democrats’ agreeing with Rauner’s agenda.

Madigan wants Rauner to sign an education funding formula (Senate Bill 1) that Rauner has deemed a “bailout” for CPS.  The Speaker is also calling on the governor to agree to subjecting to the state’s strict procurement regulations bidding for lucrative contracts to Medicaid managed care companies—even though the process is already underway.

Madigan’s final demand calls for workers’ compensation insurance companies to be subject to state reviews of the rates they charge to businesses. Businesses, however, say that Illinois should bring down their costs of caring for injured workers by reducing the lofty reimbursement rates for doctors. 

Follow Amanda Vinicky on Twitter: @AmandaVinicky

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