State Capitol: If legislative frustration could boil water, water anywhere near the Illinois Senate Chamber, would be roiling wildly. Despite months of good-faith efforts and concessions by both leaders in the Illinois Senate, another effort to move a package of bills known as “the Grand Bargain” budget, was halted shortly after it began, leaving Senate President John Cullerton, and Republican Senate Leader Christine Radogno clearly exasperated.
The latest effort to revive action on getting a budget out of the Senate, came on Wednesday, when the Illinois Senate again took up part of a legislative package of bills that’s been dubbed, “The Grand Bargain” But the behind the scenes ‘give and take’ between Republicans and Democrats didn’t get worked out quite as much as needed to move the legislation to a vote on bills having to do with a property tax freeze, which is one of the key items that Gov Rauner has pushed as part of his reform agenda.
A bill to put the cap in place, which was sponsored by Sen Radogno, was pulled from the record, meaning it would not come up on a vote.
At a later press conference, Senate President Cullerton, expressed his frustration to reporters over the continuing standoff, that comes as the Illinois legislature attempts to do what it hasn’t done in four years — pass a fully funded, full-year budget. The constitutional deadline to pass a budget is May 31.
Even if money is available to pay bills, a budget is required to give the legal authority to spend money on various programs. But Illinois is far from having enough money to meets its obligations, and a backlog of unpaid bills has piled up that is now approximately $12 and a half Billion. The state collects about $31.5 Billion in annual revenues, but is spending about $38 Billion annually on programs — leaving a growing deficit of nearly $7 Billion, and driving the state’s credit rating lower each year. Since Governor Rauner took office in January 2015, the state’s suffered six credit downgrades.
So aside from the quickly approaching deadline to pass a budget by the end of May, the pressure on lawmakers to find a way to balance the state’s finances is mounting daily. And both sides agree that any new budget will have to include an increase in the state’s 3.75% income tax rate.
Senate President Cullerton had initial success in getting the ball rolling again on Wednesday afternoon, when he called for a vote on one of the bills in the Grand Bargain, SB-10, a which would allow municipalities to save money on borrowing. It’s one of the generally agreed on, noncontroversial parts of the Grand Bargain package of bills. And when it was called, the Senate passed it with little opposition
But that’s when the next two bills were pulled from the record, meaning they were not allowed to have a vote on them. In floor debate, Sen Radogno said she wanted the bills in the Grand Bargain to be voted on as a group, not one-by-one. She also noted that negotiations were still on-going behind the scenes, and that while both sides were moving close to an agreement on the legislation, she was pulling the bills she sponsored until they were closer to a position favored by Gov Rauner.
A bill in question that Sen Cullerton called for a vote, was an effort to cap the ever-rising property taxes faced by businesses and homeowners. For many homeowners, their monthly property taxes are as much as their mortgage payment.
And this is where the revival effort on “The Grand Bargain” was derailed, with Sen Radogno pulling her bills, and noting negotiations needed to continue. The Republicans want a permanent freeze on property taxes, that could be changed by a vote at the local level if more money was needed to fund schools, or to provide more funds for municipal government. Democrats have agreed to a two-year freeze on property taxes as a concession, but say they cannot agree to a permanent freeze, that they say will destroy school funding, and damage the finances of local municipalities.
But the individual details of the budget bills in question mask a much larger issue — that time is running out to pass a budget, and that without a budget being passed, the state will likely soon face yet another credit downgrade, which would put the state in “junk bond”status.
At a minimum, that would cause the state to have to pay even higher interest rates on future borrowing. — it could also trigger some covenants in previous bond issues which could mean the state would have defaulted on some provisions of a borrowing agreement.
And in the meantime, the State of Illinois, is rushing toward bankruptcy. State’s can’t technically declare bankruptcy, which in itself is a problem. The ability to declare bankruptcy is an admission that the money owed is impossible to payback, and come agreement is reached whereby a certain amount of the money owed is forgiven.
But bankruptcy isn’t available to the state. And as of May 1, the state owes $12.5 billion to various hospitals, schools, colleges and universities, and a host of nonprofits. If a political standoff continues through the 2018 election year, when Illinois votes for governor, it’s estimated the debt of unpaid bills will hit $24 Billion. That’s about 95% of the state’s annual revenues.
Something’s gotta give.