While all eyes were on the most divisive presidential election in recent memory, Illinois’ already lousy financial footing got worse.
A forecast revealed Wednesday during a meeting with legislative leaders concluded that the state’s deficit could grow past $5 billion by the June 30 end of the state’s 2017 fiscal year.
The state’s pile of unpaid bills – which the state comptroller now pegs at $10.6 billion – could increase to $13 billion. A subsequent report from the Commission on Government Forecasting and Accountability increases the estimated unfunded liability for the five state-run pension systems, not including benefits, from $111 billion to $130 billion. Almost one dollar out of four in the state’s general fund goes to pay pensions, a percentage that, given no changes, is sure to increase.
What’s worse, a six-month stopgap budget that lawmakers cobbled together in June to end a budget impasse that lasted for the entire 2016 fiscal year expires Dec. 31. Without an agreement between Republican Gov. Bruce Rauner and Democratic leaders who control the General Assembly, the state could lapse back into operating without a budget, further raising the state deficit and lowering the state’s bond rating, which already is only a few notches above junk.
Both sides met last week at the start of the fall veto session, with more meetings likely after the Thanksgiving holiday. The positions for both sides this time around have changed little since the impasse started in May 2015, said state Sen. Karen McConnaughay, R-St. Charles. She sits on several of the bipartisan working groups appointed to help hammer out a “grand bargain” that both sides can live with.
“I think we continue to have a philosophical struggle in the state budget between the governor and Democratic leadership in this state, but I think the governor is committed to building a framework and being sincere about what he’s looking for in this budget,” McConnaughay said.
But if that includes higher taxes in exchange for some reforms, state Rep. David McSweeney, R-Barrington Hills, said both sides can count him out.
“I’m hearing talk about a ‘grand bargain,’ a compromise, and that’s just code for a massive tax increase,” McSweeney said. “When people hear the words ‘grand bargain,’ everybody needs to hold on to their wallets.”
After a year of operating without a budget, lawmakers on June 30 – the final day of fiscal 2016– approved a deal that would fully fund state government, social services and higher education through year’s end. Funding for K-12 education was funded through next June.
The standoff began in spring 2015 with Rauner’s veto of a deficit budget that was about $4 billion out of whack.
Rauner, who was elected in 2014 on a platform of ending Illinois’ downward spiral by enacting business- and taxpayer-friendly reforms and curtailing the power of public-sector unions, will not entertain the thought of increasing revenue without the Democrats backing some of his “Turnaround Agenda.” Democratic leaders, on the other hand, call many aspects of Rauner’s agenda hurtful to middle- and working-class people, and consider the budget and reforms to be two unrelated issues.
The governor, for now, has set aside the weakening of collective bargaining and other aspects of the Turnaround Agenda that Democrats find particularly odious. But he has made clear that other concessions, such as a statewide property tax freeze, workers’ compensation reform, or putting constitutional amendments regarding term limits and redistricting reform on the ballot, must be part of any compromise on Republicans’ part regarding a tax increase.
The stalemate exists despite the fact that Democrats in both the House and Senate, for now, have supermajorities that could override any gubernatorial veto. The House’s supermajority of the exact 71 seats needed exists only on paper – a handful of suburban Democrats, among the most notable being local Rep. Jack Franks of Marengo, vote against unbalanced budgets and tax increases.
What’s more, the GOP gained four seats in the House – including that of Franks, who was elected McHenry County Board chairman – robbing House Speaker Michael Madigan of a supermajority when the next General Assembly gets seated Jan. 11. While the Democrats lost a handful of Senate seats, Senate President John Cullerton still controls a supermajority.
Lawmakers are scheduled to meet only three more times until the end of the year, barring any special sessions. But a provision of the Illinois Constitution makes the first 10 days in January the most likely time that lawmakers will be asked to vote on a compromise, provided one is even reached in the first place.
The number of votes needed to pass a budget increases from a simple majority – 60 in the House and 30 in the Senate – to a supermajority from the end of session May 31 to the end of the calendar year, or 67 in the House and 36 in the Senate. But the threshold reverts back to simple majority with the new year, which would make it easier for lawmakers to pass a compromise in a lame-duck session. Re-elected lawmakers know they are “safe”, and the votes of outgoing lawmakers who have nothing to lose – and possibly something to gain in exchange – can be easier courted.
If this sounds familiar, it’s because lawmakers exploited this to pass the ballyhooed 67 percent income tax increase. Lawmakers in the final hours of session in January 2011, just after the gubernatorial election that former Democratic Gov. Pat Quinn won, passed the four-year increase on a simple majority vote with the help of a dozen lawmakers leaving office – six of them, including two who campaigned against a tax increase, subsequently ended up appointed to lucrative government jobs.
McConnaughay, like others before her, said that a compromise has to be reached in which the state can have a budget while enacting policies aimed at stopping people and jobs from fleeing to other states. The problem, she said, can’t be solved “on the backs of our existing tax base.”
“The sign of a good bargain is one in which everyone gets some of what they believe is important, and some things that make them unhappy,” McConnaughay said.
But lawmakers such as McSweeney, who oppose taking any more money away from taxpayers, call the whole thing “political theater” and criticize the ongoing closed-door working group meetings.
“That’s my frustration. My top concern is a lame-duck tax increase,” McSweeney said.