By John O’Connor
SPRINGFIELD — Gov. Bruce Rauner gave more specifics Wednesday on what steps he’d accept to end the state’s nearly two-year budget stalemate, telling lawmakers he’s open to raising taxes on services such as car repairs or haircuts but not on food, medicine or retirement income.
During a 45-minute speech, the first-term Republican endured derisive laughs from Democrats who control the Legislature when he criticized “pointing fingers or assigning blame.” However, he praised the Senate for making “real progress” on a compromise.
“There is no one single bullet, no one single ‘must have,’ for our administration,” Rauner said. “But for the future of our state, change must be real, not just a newspaper headline.”
Despite having no annual spending plan since July 2015, state government continues to operate largely because of court orders and intermittent appropriations by lawmakers.
But the picture is bleak. Without action, Illinois will have a $5.3 billion deficit when the current fiscal year ends June 30. There is a backlog of $11 billion in overdue bills. State pension programs are $130 billion short of what they need to pay promised benefits to retired and current employees.
Rauner re-asserted his demand that a budget agreement must come with regulatory changes — some of which are in the Senate plan — such as reducing workers’ compensation costs to boost commerce.
The property-tax freeze the Senate has floated would end after two years while the personal income tax would increase from 3.75 percent to 4.99 percent. Rauner said he won’t accept a permanent income-tax hike without holding the line on property taxes permanently too.
“The final result must be a good deal for taxpayers and job creators; a grand bargain that truly balances the budget once and for all, and really moves the needle when it comes to job creation,” Rauner said.
He rejected taxing retirement income and increasing the sales tax on food and medicine, included in the Senate plan. But he said he’ll listen to plans to create a tax on services.
And he demanded “a hard cap on spending that forces state government to live within its means, balance the budget and pay off the state’s debt.”
“Spending reductions in the budget need to be real — not smoke and mirrors,” Rauner said.
Rauner also will demand a permanent local property-tax freeze in exchange for any permanent income-tax hike, along with a cap on government spending.
But Democrats in the Assembly are questioning whether Rauner’s plans will produce a balanced budget to help the state dig itself out of a multibillion dollar deficit.
Illinois House Democratic budget negotiator Rep. Greg Harris says the Republican governor shouldn’t count on as-yet-unauthorized savings from pension reform, health care cuts and the sale of property to make ends meet.
Harris says including those savings in the budget leaves Democrats with questions. He plans on reviewing the proposal to ensure it doesn’t shortchange workers. But he says he’s “heartened” that the first-term governor wants to work with all four caucuses.
House Speaker Michael Madigan also released a statement following the governor’s address calling Rauner’s budget unbalanced. The statement says House leadership will focus on continuing to protect middle class families while promoting economic growth.
Senate leader Sen. Tom Cullerton, D-Chicago, says it was Rauner’s third budget speech with “no real numbers.” He says Illinois needs solutions, “not political buzz words.” Sen. Daniel Biss says Rauner ducked responsibility.
But Republicans were complimentary.
Senate Minority Leader Christine Radogno says Rauner demonstrated his willingness to work with both parties.
Radogno says she and other Republicans want a bipartisan compromise that’s “a good deal for the taxpayers.”