Budget mess grows deeper and deeper for Indiana’s neighbor

  • Comments
  • Print

Already holding the title for longest state budget stalemate, Illinois is poised to enter a third year without a spending plan as the feud between Republican Gov. Bruce Rauner and Democrats controlling the Legislature drags on.

Lawmakers blew past a budget deadline last month, triggering a requirement that any new budget vote be by three-fifths instead of a majority.

They're expected to return to Springfield for a special session starting Wednesday facing higher stakes to get a budget for the fiscal year that begins July 1.

Unpaid bills are piling up. Rating agencies are threatening to downgrade the state's credit to "junk." Uncertainty about schools, transportation projects and social services grows. And campaigning for the 2018 election is well underway in what some predict could become the most expensive governor's race in U.S. history.

Here's a look at the situation:

The longest stalemate?

No other state even comes close to Illinois' budget stalemate, which was unprecedented once it reached a full year.

In that time, the backlog of unpaid state bills has swelled to roughly $15 billion. Generally, bills 60 days late are considered unpaid and face late payment penalty. That tab is $800 million, according to Illinois Comptroller Susana Mendoza's office.

Illinois' already worst-in-the-nation credit rating has already sunk even further, with ratings agencies threatening a downgrade to "junk" status without a budget. Lottery officials say Powerball and Mega Millions are ready to drop games in Illinois too.

Some U.S. states have gone months without an agreement. Pennsylvania had a nearly nine-month budget impasse that ended last year. It took Kentucky nine months in 2003.

Still, Illinois holds the record.

The stalemate started in 2015 when Rauner—Illinois' first GOP governor in over a decade—took office. The venture capitalist holding public office for the first time has pushed for pro-business measures in conjunction with a budget that includes a tax increase. Democrats say some of those ideas hurt the middle class and they've taken up several others, but Republicans keep changing their demands. Republicans say Democrats' efforts fall short of the reforms needed.

How does it get away with it?

Whether there's a budget or not, Illinois is automatically spending billions more each year than the state is taking in, because of state laws, court orders and agreements, and because legislators haven't passed a spending plan that takes into account the rollback of a temporary income tax increase.

Schools have stayed open. In 2015, Rauner vetoed everything in the budget Democrats sent him except a K-12 education bill and last year lawmakers approved a temporary "stop-gap" plan allowing schools to open on time.

Roughly 63,000 employees continue to get state paychecks, though Illinois Attorney General Lisa Madigan has sued claiming employees shouldn't get paid without an appropriation.

Other states have consequences. In 22 states, failure to pass a budget will lead to a government shutdown, according to the National Conference of State Legislatures. In 2011, Minnesota shut down for 20 days, closed state parks and temporarily laid off 19,000 employees.

Some states have measures to deter late budgets. In California, state legislators and other statewide elected officers don't get a paycheck if they fail to send the governor a budget by June 15.

Campaign trail

It's well over a year away, but record-breaking campaign donations, ads, robocalls, endorsements and campaign mascots crop up near-daily.

The Illinois Campaign for Political Reform says the 2018 gubernatorial race might be the most expensive in the nation's history as Rauner seeks a second term.

Already, he's put $50 million of his own money into a campaign fund with more expected, and billionaire investor Ken Griffin added $20 million.

Democrats lining up to challenge Rauner are billionaire businessman J.B. Pritzker, who's contributed $14 million to his campaign fund. Two other Democrats have raised over $1 million: Chris Kennedy, nephew of the late President John F. Kennedy, and state Sen. Sen. Daniel Biss.

Rauner, who's already taken a campaign-funded state tour, began appearing in television ads in March to promote his agenda. The state GOP, funded almost entirely by Rauner, has used robocalls to target Democrats.

Pritzker, an heir to the Hyatt hotels fortune, regularly airs television commercials. His campaign, which has received union support, has also taunted Rauner at the Capitol with its "Tick Tock the Budget Clock" mascot.

The consequences

The impasse has hit social services and higher education hard, with even more pain expected if there's no budget.

The organizations that contract with the state to run homeless shelters, care for elderly and help domestic violence victims wait six months or more to get paid. They've made cutbacks, let employees go or closed. One shelter that helps domestic abuse victims in several southern Illinois counties — some of the poorest in the state—says it'll close without an infusion of funds.

The standoff also threatens enrollment at the state's colleges and universities.

In Chicago, Northeastern University had a temporary shutdown, furloughed employees and announced it'd eliminate 180 full-time jobs. Southern Illinois University in Carbondale says nearly 80 employees are losing their jobs. Northern Illinois University has said it'll cut 150 staff positions.

The state Department of Transportation says all road construction will be halted July 1 without a budget.

Possible solutions

There are options on the table. The Senate adopted a $37.3 billion plan with cuts and an income tax increase. The House adjourned last month without taking it up and Rauner's budget chief has said it's heading in the wrong direction.

After the session ended, Republicans presented their own "compromise" budget and reform package, agreeing to a temporary income tax increase for other measures including a property tax freeze. But Democrats, skeptical of the timing, say the deal is far from bipartisan.

Lawmakers could also attempt another temporary budget.

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.