Madigan: So few tax votes, it's time for 'alternative budget'

SPRINGFIELD — House Speaker Michael Madigan delivered crushing news to Gov. Pat Quinn’s hopes of passing an income-tax extension, telling reporters Wednesday that less than half of the House Democratic caucus supports the governor’s budget plan.

“Obviously, it’s a very difficult vote in a difficult time,” Madigan, D-Chicago, told reporters after a brief closed-door meeting of House Democrats.

With a May 31 legislative adjournment deadline looming, the speaker surveyed his 71-member caucus to learn how close he was to amassing the necessary 60 votes to pass Quinn’s bid to block state income tax rates from rolling back in January and to send homeowners a $500 property-tax rebate before the fall elections.

“There were 34 members of the caucus voting yes, a little over 30 voting no. In light of that, I’ve instructed the appropriations chairs to reconvene the working groups on the budget. We plan to invite the Republican members of the House to join the working group and work with Senate Democrats. And 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,” Madigan said.

And the real number of “yes” votes might actually be 33 since indicted state Rep. Derrick Smith, D-Chicago, failed in his bid Wednesday to move back the start of his federal corruption trial from May 28 until June 2 so he could vote with Madigan on the tax extension.

What it all means is the House is now headed toward creating what Madigan called an “alternative” budget. That plan will be pared back by as much as $4 billion and effectively replace the dozens of spending roll calls from last week, when the House passed a $38 billion budgetary framework without knowing the fate of the income-tax extension.

After Madigan’s remarks, Quinn’s administration appeared far from willing to wave the white flag on his tax-extension push. An aide called the situation surrounding the plan “very fluid” and warned the pruned-back alternative the speaker is now raising would hurt Illinois families.

A budget plan that “includes radical cuts … would harm schools, students and our most vulnerable residents. That’s why it’s not recommended,” Quinn spokeswoman Brooke Anderson said. “The governor is working very hard and will continue working to pass a responsible budget that properly funds education, pays down the bills and secures the state’s long-term financial future.”

The 5-percent personal income tax rate and 7-percent corporate income tax rates that have been in place since 2011 are scheduled to drop to 3.75 percent and 4.8 percent, respectively, on January 1 under terms of a temporary tax increase enacted nearly four years ago by Quinn and the ruling Democrats at the Capitol.

That rollback would create a $4 billion hole in the Fiscal 2015 budget that takes effect July 1.

The speaker said the “alternative budget” he intends to present to House members will be reconstructed to take into account the possible loss of that $4 billion caused by letting higher income-tax rates sunset in seven months.

It will then leave his members with the unpalatable choice of either passing what Republicans already are branding as an election-year tax increase or supporting a drastically reduced budget that Madigan told reporters would certainly mean less money for Chicago’s cash-strapped public-school system.

Asked if it’s possible that facing that alternative could cause some of the 30 Democratic holdouts to change their minds, Madigan answered, “It’s a possibility.”

To that end, the speaker refused to say that the governor’s budget plan, while on legislative life support, is dead when asked that question by reporters.

“As far as I’m concerned, I’m going to continue to work for the governor’s proposal. I presume the governor’s going to continue to work for his proposal,” Madigan said. “However, the clock is running, and we’re getting closer to the end of the month.”

Madigan also appeared to throw cold water on the idea of a capital construction program that could be used to leverage some Democratic fence-sitters with the offer of goodies to hand out to constituents before the Nov. 4 election.

“There’s no movement. There’s a lot of discussion,” the speaker said. “In my discussions with members, some of those members talked about capital projects, but I didn’t.”

Madigan’s legislative counterpart, Senate President John Cullerton, D-Chicago, said his chamber is not prepared to move ahead with a tax-extension vote since support in the House has faltered.

“It’s always been up to the House to go first because they had a closer — tougher — effort,” Cullerton said in an interview with Early & Often, the online political portal of the Chicago Sun-Times. “We have more Democrats here and we have more support. We may have some Republicans even supporting it here. So we can pass it here, we believe. But if the House doesn’t then we can’t do it. So then we have to go ahead and pass a budget without the money that comes in from the income tax.”

Cullerton appeared to support Madigan’s logic in presenting his members with a far more austere budget.

“I haven’t talked to the speaker yet, so I’m not sure what other alternatives he has. But assuming he doesn’t have the votes to extend the income tax, then you have to do a budget. You can’t do parts of the budget for six months. You can’t hire teachers for six months, for example,” he said.

But Cullerton cautioned that that approach would mean returning to the years of not making pension payments and reversing course on paying a backlog on vendors.

“We made great progress on paying our vendors but also paying off pension obligation bonds. So we’ve been making tremendous efforts in paying down the debts,” Cullerton said.

“We made great progress on that and this would reverse that at a minimum then there would be cuts to education and human services and the operation of state government and higher education. That sort of thing. This is what we’ve been trying to tell people since February,” Cullerton continued. “But it is what it is.”

Amid all of the budgetary strategizing going in Springfield, Smith’s confirmed absence next week only complicates the head count if Madigan somehow is able to turn the tide on the tax extension.

Smith faces trial next week in federal court on bribery allegations. On Wednesday, U.S. District Judge Sharon Johnson Coleman denied his bid to delay the trial so Smith could cast a “yes” vote in favor of contentious legislation that would make the state’s temporary income tax increase permanent.

Smith’s attorneys had asked Coleman to delay the trial so that he could cast a “yes” vote for the bill, which would make a 2011 tax increase permanent.

But an unimpressed Coleman said Smith’s attempts to delay the trial — which was already reset once in January — were “foreseeable.”

Unhappy that Smith failed to even show up in court Wednesday morning, she also wasn’t buying arguments Smith’s attorney Vic Henderson made about a back injury Smith sustained in a car accident last month.

Noting that Smith hadn’t complained about the injuries at several court hearings since the accident and was only bringing them up a week before the trial was due to start, she added that Smith “can stand, he can do whatever he needs to do to get through the trial.”

And she suggested that Smith’s back pain may have more to do with the stress of the allegations that he took a $7,000 cash bribe to support a grant application than any physical injury.

His symptoms “may even seem real to [him],” she added. “There’s a lot of angst … as you get close to trial.”

Outside court, Henderson said he had not received any request from Madigan to attempt to delay the trial.

When asked if Madigan asked Smith to do so, Henderson equivocated.

“I’m not Carnac the Magician [sic], I can’t tell you what’s in somebody else’s mind,” Henderson said.

Contributing: Kim Janssen