Senate budget’s ‘work in progress’ includes filling $4.3B hole

Called a “work in progress” and “under construction,” a Senate “grand bargain” budget package has a $4.3 billion hole — with spending at court ordered levels and a huge backlog to blame.

The governor’s budget office released its analysis of a package of 13 Senate bills filed last week. Senate leaders said they want to move quickly to try to pass the package and end an 18-month budget impasse.

But despite the Senate’s ambitious revenue package, the chamber’s plan would still leave a $2.3 billion deficit for the budget that begins later this year.

Included in the sweeping package is a hike in the personal income tax from 3.75 percent to 4.95 percent; a penny-per ounce tax on sugar-sweetened beverages; borrowing $7 billion to pay down bills; and adding six new casinos, including one in Chicago. It also includes a temporary freezing of property taxes; local government consolidation; workers’ compensation changes; and term limits on legislative leaders.

A bill would raise the Illinois minimum wage to $9 an hour beginning July 1, 2017. It would increase by 50 cents a year until 2021 when it would reach $11.

A pension reform bill would eliminate the General Assembly Retirement System for future lawmakers – meaning new lawmakers won’t get pensions. That is estimated to save $700 million to $1 billion annually.

The Governor’s Office of Management and Budget conducted a review of the package, at the request of Illinois House Republicans. House leaders — and Rauner — say they’ve been kept out of the most recent talks between Illinois Senate Republican Leader Christine Radogno and Illinois Senate President John Cullerton.

The analysis found revenues and spending outlined in the plan would lead to a budget deficit in fiscal year 2017 — which began on July 1, 2016 — of $4.3 billion. That deficit is largely due to spending at court ordered levels that exceeded revenues, which in turn resulted in a giant bill backlog. Part of the Senate plan is a bill to borrow $7 billion in bonds to help pay off old bills within the next seven years.

The state had been operating on a partial budget last year, which expired on Jan. 1. There are still some appropriations in place, but not to help with social services and higher education.

The Senate plan includes $4.4 billion in appropriations for operations and grants. And expenditures from the appropriations and base spending — combined with an extra $215 million for Chicago Public Schools teacher pensions — reach $39.7 billion. That leaves a $4.3 billion deficit.

For fiscal year 2018 — which begins on July 1, 2017 — the annual deficit in general funds spending would be $2.3 billion, according to the analysis.

Rauner has stayed out of the Senate talks, saying he’s encouraged by the progress of Senate leaders.

Speaking to reporters at a Springfield event on Wednesday, he acknowledged the plan is “fluid,” and may change.

“There are a lot of ideas being proposed and the General Assembly right now is trying to get a balanced budget along with structural changes,” Rauner said “I think it’s premature for me to comment on any specific types of proposals yet. I think things are very fluid. They’re evolving. Some ideas are going somewhere. Some aren’t. I’m trying to let the process kind of organically grow on its own.”

Rauner said House Republicans went to his office to ask for an analysis.

The House GOP on Wednesday released its own lengthy 102-page staff analysis of the Senate package.

House Minority Leader Jim Durkin declined to comment. And House Speaker Mike Madigan’s spokesman didn’t return a call for comment.

Patty Schuh, spokeswoman for Radogno, said the Senate leaders are continuing to discuss the plan, which they have been doing for several weeks.

“Their whole purpose was to lay out a balanced budget with the revenues and reforms necessary to make it work,” Schuh said. “It’s still a work in progress.”

And Cullerton spokesman John Patterson too, called the plan “under construction.”

“We’ll check it out and see if changes need to be made,” Patterson said. “The goal all along has been to produce a balanced, sustainable budget. We filed the legislation to invite input and constructive criticism. The proposals remain under construction. We’ll look into this and take steps as needed.”

Budget talks broke down between the governor and Madigan in December — and Madigan last week vowed to unveil his own budgetary plan, which includes a focus on job growth. It also includes cutting the corporate income tax by at least 50 percent.

It sets the stage for competing House and Senate plans.

The Senate bills were assigned to committees last week, putting them in position for public input and committee hearings later this month. The Illinois General Assembly is back in Springfield next Tuesday, with Rauner delivering his State of the State address on Wednesday.

GOMB Review of Senate Revenue and Spending Provisions by Scott Fornek on Scribd