Wednesday, May 21, 2014

Madigan tells House committees to craft a tax-rollback budget

By Jamey Dunn

House Speaker Michael Madigan said Wednesday that a proposal to extend the current tax rates is short by nearly half the votes it would need to pass. Madigan said he told budgeting committees to draft a plan that assumes the rates will begin to step down next fiscal year.

As the law stands, the 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 are advocating for an extension of the rates, which are 5 percent for individuals and 7 percent for corporations.

House Democrats took a test vote on the extension behind closed doors this afternoon. Madigan said just 34 of them voted in favor of extending the current tax rates, while 30 voted “no.” A handful of Democrats did not take a stance. The proposal needs 60 votes to pass in the House, and the House Republican caucus has already taken a stance against it. “Obviously it’s a very difficult vote. It’s coming at a difficult time,” Madigan said after the caucus meeting. The plan also includes a annual $500 rebate for home owners, which Quinn has pitched as property tax relief.

Last week, the House passed spending that assumed the rates would be extended. Madigan said he has asked the chairs of the chamber's budget committees to work with committee members and present new budget bills without that revenue as soon as possible. “Our plan and our goal is to work toward the preparation of an alternative budget to the one that was adopted by the House a few days ago.” 
Budgeting committees in both chambers have already held hearings on what the fallout of such a budget might be. The potential outcomes have been framed as dire and include: the closer of state prisons and the release of inmates with little to no monitoring; the layoff of thousands of teachers; the elimination of child care for many low-income families and in-home care for many seniors; the closure of all forensic labs in the state and the layoff of hundreds of state troopers. The governor also presented a budget based on the current law, which he dubbed his “not recommended budget.”

“Things are very fluid,” Quinn's spokeswoman Brooke Anderson said of Madigan's vote count. “The not-recommended budget includes radical cuts that would harm schools, students and our most vulnerable residents.” Quinn has been meeting with House Democrats individually this week to try and persuade them to support the extension.

Madigan said he thinks it is possible that some House Democrats may change their minds about the tax vote once they see what the cuts without it would look like. “As far as I’m concerned, I’m going to continue to work for the governor’s proposal. I presume the governor is going to continue to work for the proposal. However, the clock is running, and we’re getting closer to the end of the month.” The regular session is scheduled to at midnight on May 31. A budget passed after that time would require a supermajority. However, after January (and after the November general election) the requirement goes back down to a simple majority.

Madigan said he plans to ask Senate Democrats to work with the House on a version of the budget that assumes the current tax rates. A spokeswomen for Senate President John Cullerton said that Senate Democrats will collaborate with the House. But she says they would likely not be willing to pass any plan that is based on an extension of the current rates if the extension is not approved, too. “We have the votes to renew our tax rates. There is strong opposition to passing a budget that doesn’t match available revenues,” Rikeesha Phelon said in a written statement. “If the House is unable to pass revenue, we will be forced to develop budget outlines that may be balanced [but] will be insufficient to meet our budget pressures. It won’t be pretty.”

Opponents to extending that rates claim that Democratic leaders are making the budget picture look worse than it would need to be in order to gain support for their plan. “The Democrats’ approach this entire spring has been to try to create as dire a picture as possible,” said Palatine Sen. Matt Murphy. “You can make it a lot more plausible that you can fund core services and still allow the tax rate to go back down as the Democrats promised it would, but they don’t want people to see that. They don’t want that argument out there because they want to continue to get the money that they’ve been getting.”

Madigan said he has not put forth any other potential revenue sources. He also said that a capital construction plan is not moving forward at this time. Quinn has called for a new capital bill because the current one will run out soon. Capital construction projects may also be a lure for Democrats who are on the fence about extending the tax rates. “In my discussions with members, some of those members talked about capital projects. I didn’t,” said Madigan.

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