Illinois governor seeks broad power to balance state budget

Reuters News
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Posted: Feb 17, 2016 1:36 PM

By Dave McKinney

SPRINGFIELD, Ill. (Reuters) - Illinois Republican Governor Bruce Rauner on Wednesday called on Democrats who control the legislature to give him the power to balance the state's chronically unbalanced budget if they continue to reject his proposed reform package.

In his second budget address to the legislature, Rauner said residents were "sick and tired" of a political impasse that has left the fifth-largest U.S. state without a full budget for nearly eight months.

Illinois and Pennsylvania are the only two states that lack complete fiscal 2016 budgets.

Rauner, a wealthy venture capitalist turned politician, offered two fiscal 2017 budget proposals: a $36.3 billion general fund spending plan that incorporates his so-called turnaround agenda that Democrats have opposed, or a budget tied to proposed legislation to empower him to reduce spending to $32.8 billion.

"I won't support new revenue unless we have major structural reforms to grow more jobs and get more value for taxpayers," he said.

Rauner insisted any fiscal 2016 budget deal must include Democratic concessions on at least "a portion" of his agenda to weaken collective-bargaining rights, limit workers injured on the job from obtaining compensation from employers, freeze property taxes and change how legislative district boundaries are drawn.

House Speaker Michael Madigan and Senate President John Cullerton, both Chicago Democrats, declined to support big budget powers for Rauner.

"What the governor is asking for is unilateral budget-making power," Madigan said, adding a balanced approach of spending cuts and new revenue is needed.

Illinois has the lowest credit ratings and worst-funded pensions among the 50 states.

While the search continues for a constitutional way to rein in a $111 billion unfunded pension liability, Rauner proposed saving $4.8 billion over four years by shifting some retirement costs for 1,900 high-paid employees onto their local school districts, universities and community colleges. Pension-influencing, end-of-career salary increases would face a tighter cap, while state payment spikes caused by assumption changes by the state's five retirement systems would be smoothed over five years.

Rauner pledged to work on a bipartisan revamp of the state's school funding formula, adding any proposal involving "taking money from one school district and giving it to another is doomed." He warned the Chicago Public Schools "is threatening a lawsuit against the state."

CPS CEO Forrest Claypool said the district, mired in its own financial crisis, is a victim of unequal funding by the state and could not ignore "any tool" to protect students. He added that the governor was unwilling to address that inequity.

Rauner proposed boosting per-student funding in K-12 public schools to $6,119, the highest level in seven years

A fiscal 2016 school funding bill passed by Democrats last year marked the only major budget measure Rauner initially signed, leaving Illinois to operate on court-ordered spending and ongoing appropriations for bonds and pensions for the fiscal year that began July 1.

Spending is largely at fiscal 2015 levels when revenue was higher thanks to income tax rates that had been temporarily raised, but which rolled back on Jan. 1, 2015, making Illinois' finances even shaker. Public universities and scholarships for low-income college students remain unfunded.

Several hundred protesters, mostly students from public universities, crowded into the State Capitol rotunda and chanted “save our schools” and “hey, hey, ho, ho, Governor Rauner has got to go” while the governor delivered his speech inside the House chambers.

Illinois' current $7.17 billion backlog of unpaid bills, a barometer of the ongoing structural budget imbalance, could be tackled partially through up to $4 billion in new borrowing that would cost less than the 12 percent penalty now tacked onto tardy state bill payments, an administration official said.

(Additional reporting by Karen Pierog and Fiona Ortiz in Chicago; Editing by Matthew Lewis)