House working on less severe tax-rollback budget plan

By Jamey Dunn with Caitlin Rydinsky contributing 

After an austere budget bill failed miserably on the House floor on Friday, House Speaker Michael Madigan said that Democrats would craft a more workable budget without an extension of the current tax rates.

The proposal failed with only five voting “yes” and 107 members voting against it. All the votes in favor of the $34.8 billion budget came from Democrats. The so-called doomsday budget would have cut education by $570 million and human services by $365 million from the current fiscal year.

Republicans decried the proposal as a stunt and not a legitimate effort to cut the budget in a responsible way. “I think it was something that was another ploy, a tactic, that is in the game plan of the speaker. We’ll have to wait and see what the real meaning was behind that vote,” said Bloomington Republican Rep. Dan Brady, who serves on the House higher education budgeting committee.

Madigan said he was not surprised that most on his side of the aisle rejected the plan. “Democrats generally are not interested in reducing government and providing less government help for people. They’re not interested in that, and so [the] democratic vote on the budget this morning should not be a surprise.” He said that Democrats on the budgeting committees in the House will meet to try and work out a plan that can pass in both chambers and be signed by Gov. Pat Quinn. “My expectation is at the end of the day, there will be at least 60 Democrats, maybe more, that will be supporting a budget which will continue to provide a good level of state services to the people of Illinois without the extension of the income tax increase.”

As the law stands, the income tax rates would step down to 3.75 for individuals and 5.25 for corporations half way through Fiscal Year 2015. A rollback of the rates would take an estimated $1.6 billion in revenue with it. Gov. Pat Quinn and Democratic legislative leaders have said they support for an extension of the rates, which are 5 percent for individuals and 7 percent for corporations. But Madigan told reporters this week that there are not enough Democrats in the House who support keeping the current rates.

One way that plan without a tax rate extension might avoid deep cuts is by reducing the amount of money the state uses to pay down its backlog of overdue bills. Such a move would likely result in schools, social services providers, doctors and others who do business with the state having to wait longer to be reimbursed for their services. The backlog is expected to be about $5.6 billion when the current fiscal year ends on June 30. That number is down from the peak level of $9.9 billion in 2010. In some cases, those owed money by the state where waiting for six months or longer to be reimbursed.

Such a move could earn the plan opponents from both parties. “I know that the amount of the unpaid bills that the sate has outstanding is of concern, not only to me but to other legislators as well, and any budget plan is going to have to have a component that pays off a substantial amount of that debt,” said Rep. Sam Yingling, a Democrat from Round Lake Beach. “I think difficult decisions are going to have to be made. Everybody knows that the state of Illinois has lived far beyond its means for a number of years, and now the state is going to have to come to grasp with the fact that it can’t afford everything its been funding. So difficult decisions are going to have to be made, and not everybody is going to be happy with those decisions.” Yingling does not support an extension of the current tax rates.

Madigan said Friday that he still supports extending the current income tax rates, but he said that getting it done is another matter. He says that only 34 members of his caucus are in favor of extending the current rates. “I’m going to continue to work for the extension of the income tax increase because my view is that the state does need more money to support the programs that are offered by the state, but 34 is a long way from 60.” Madigan said that he does not plan to send Quinn a lump sum budget or pass bills that do not match the revenue coming in, forcing the governor to make cuts.

“There’s certainly not the votes for the tax increase,” said Rep. Jack Franks, a Marengo Democrat. Franks opposes extending the current tax rate. But he says that he thinks there could be an option in between the doomsday option voted down today and the $38 billion in spending the House approved last week. Madigan put a hold on those budget bills, so they did not go over to the Senate after passage. “I think there’s a happy medium; at least there should be a compromise and I’m hoping in the next few days we’ll get closer to it.”

Still, some are hoping that House Democrats will come around to the idea of keeping the income tax increase. Weekend session has been canceled, so lawmakers from both chambers will presumably head back to their districts for the next two days. “I think that the members, at least in the House, need to come to their senses and realize that you can’t adequately fund education without adequate resources to do so,” said Homewood Democratic Rep. William Davis, who chairs the House’s K-12 education budgeting committee. “Hopefully, members will take the weekend, come to their senses and realize that we need to come back sit down and have real conversations about the priorities of the stat of Illinois and then discuss what it’s going to take to fund those priorities.”

If the House can did pass a budget somewhere in the middle, the real challenge of getting support from the Senate and Quinn would begin. Senate President John Cullerton has said that he has the support to pass an extension of the rates, and Quinn has been lobbying house members hard for a tax vote. Getting more liberal Democrats in the Senate to vote for a budget that cuts or even funds services at a flat level but delays payments to schools and vendors could be difficult.

Quinn based his budget proposal on extending the rates, expecting the sometimes-stubborn governor to back track on the budget during a close election could be unrealistic. Part of Quinn’s proposal also included a $500 rebate for home owners to defer their property tax costs—an initiative the governor was no doubt hoping to tout on the campaign trail.

 Franks said of Quinn: “If there’s no additional revenue coming in, then he can’t spend any extra money. I think he may not like it, but it is going to be what it is.” He added, “Nobody’s going to like the budget.”