Tricky, unpopular budget at crux of Springfield’s ‘grand bargain’
By John O’Connor
AP Political Writer
SPRINGFIELD — The Illinois Senate’s “grand bargain” budget compromise is made up of 11 pieces of legislation, three of which are critical to the effort to keep Illinois from entering a third consecutive year without an annual budget plan.
The three bills would provide a semblance of financial security after years of wrangling between the Democratic-controlled Legislature and GOP Gov. Bruce Rauner left the state without a budget. Lawmakers have until their scheduled May 31 adjournment to approve the plan. Regardless of the outcome, it promises to play a prominent part in the 2018 race for governor.
Here are things to know about the financial portion of the grand bargain:
3 little bills
The budget is made up of an outline for spending $36.5 billion, less than what Rauner proposed in February; legislation with legal language to implement it; and the key component, an income tax increase and expansion of the state sales tax.
The spending outline is based largely on a compromise budget introduced by the deputy Republican leader, Bill Brady of Bloomington. But when Senate Democrats put it up for a vote on Wednesday, it was approved 31-21 — with no Republican votes. And Democratic votes fell off when implementation language went up, falling short by three votes, 27-24. That dissuaded Democrats from making a run at the tax increase.
The links on unlinked bills
When Cullerton and Senate Republican Leader Christine Radogno of Lemont hatched the grand bargain, each bill was linked, so that none would take effect unless all did. Cullerton changed that last week as he called them for votes. Each would stand alone.
But de facto links remain. Despite the Senate’s endorsement of seven of 11 proposals, the effort could be for naught if Democrats and Republicans don’t come to terms on tax issues. One of the issues that has held up a budget for two years is Rauner’s desire for a permanent property tax freeze. Democrats say that would cripple local governments, particularly public schools. Brady responds that in the name of parity, no income tax should be permanent, either. And the payback period for an approved grand-bargain plan to borrow $7 billion to pay down overdue bills should be limited to the same term, he says. Democrats set that limit at seven years currently — except they won’t budge off a maximum two-year property tax freeze. Republicans prefer four for all.
“We’ve always said, if you ask the taxpayers to pay the additional taxes, we need to get them the equivalent in tax relief,” Brady said.
Tax and spend (on invoices)
With an expected deficit nearing $6 billion at the June 30 end of the fiscal year and the pile of past-due bills ending the week at $14.4 billion, few people believe the state can dig its way out without new revenue. The plans call for a 32 percent increase in the personal income tax rate, from 3.75 percent to 4.95 percent, for seven years. Senate Democrats say that would produce $5 billion more each year when the accompanying corporate tax hike is included.
An expanded sales tax would produce about $150 million. For the first time, the 6.25 percent sales tax would be applied to repair and maintenance; landscaping; laundry and dry cleaning; storage units; cable, satellite and streaming services; pest control; private detectives, alarm and security services; and personal care.
Brady suggested more than two dozen areas of savings or spending cuts; Democrats say they accepted 22 of them to come up with nearly $3.8 billion in reductions.
The biggest area would be in creating a new, less-generous level of pension benefits to new employees, saving $1.25 billion. The measure’s sponsor, Democratic Sen. Andy Manar of Bunker Hill, says those savings would be immediate because they involve changes other than giving employees a choice of benefits and retirement age and because the state would not have to contribute as much toward the lowered benefit.
There’s a $435 million projected savings to state employees’ group health insurance, a number that could go up or down depending on whether Rauner settles the issue in outstanding collective bargaining negotiations with the employees’ union, the American Federation of State, County and Municipal Employees, Manar said.
Medicaid spending would be cut by $405 million.
And a 5 percent slice from nearly ever budget line would capture $328 million.
“We’re concerned about this, of course, because this spring during the course of appropriations hearings, every (state agency) director said that it was going to be very difficult for them to implement 5 percent reductions,” Manar said.