Springfield, Ill.— No K-12 funding plan, let alone a fiscal 2017 budget, cleared the Illinois legislature before midnight Tuesday when the spring legislative session ended, threatening to throw the financially-beleaguered state into a second budget-less year with alarming economic, financial and social implications.
Disagreement among the legislature-controlling Democrats derailed two bills their leaders introduced after disregarding the Republican governor’s stopgap budget proposal in both chambers Tuesday. The House turned down by 24-92 a stand-alone K-12 education budget 20 minutes before the midnight deadline. Earlier in the evening, a sufficient number of Senate Democrats defied House Speaker Michael Madigan by opposing the budget — $7.5 billion short of revenue, according to Republicans — that Madigan muscled through the House last week.
The Democrats then proposed separate K-12 funding for fiscal 2017 starting July 1 amounting to $15.7 billion, $900 million more than last year. Chicago Public Schools would receive $475 million, almost half of the additional funding, including $270 million of low-income student aid and $205 million of pension contributions.
“This is a Chicago bailout to the detriment of the rest of Illinois,” said Representative Ron Sandack, R-Downers Grove, before the failing vote.
The failure to resolve the state’s budget crisis risks further deterioration of the state’s bond ratings and funding for schools, state universities, social services and other government entities. Suffering from the highest unemployment rate in the U.S. and residents leaving for other states, the government of the fifth most populous state has been on auto-pilot appropriating money only sporadically on court orders and consent decrees.
Madigan announced plans Monday to keep the House in special sessions every Wednesday throughout June, in case there would be no agreement by the end of the day. A tougher three-fifths majority is needed to pass any bill starting June 1.
Budget war
Democratic leaders went along with their own short-term spending plans for public schools and a $7.5 billion out-of-balanced full year budget without considering the governor and Republican leaders’ stopgap budget bills. Speaker Madigan wanted the governor’s stopgap proposals to go to budget working groups first. Democratic lawmakers failed to pass either bill because of cracks within the majority party.
On the Democrats’ public school budget that cleared the Senate, 37-19-2, but failed in the House, Republican lawmakers said there’s not enough time to pore over the school funding formula through which $700 million would be distributed among hundreds of school districts.
The new Equity Grant considers a district’s poverty level and local resources, according to House Majority Leader Barbara Flynn Currie, D-Chicago. The spending plan promised each district no less general state aid than in this past school year.
Earlier in the day, blaming the Democrats for the state’s economic and financial distress, the second-year Republican governor advocated a short-term lifebuoy for education and essential government operations, and re-iterated his vision for pro-business reforms and economic growth that he says are they keys to balanced budgets.
“The Democrats have spent our state into the toilet for 30 years, we’re like a banana republic,” Rauner said Tuesday afternoon on the statehouse grand staircase flanked by state GOP leaders and lawmakers.
Tim Nuding, Rauner’s budget director, suggested Tuesday morning a “bridge plan” to fund public schools, state universities, social services programs and prisons through December. The money would come from federal dollars, rainy-day funds, and not repaying $450 million of interfund borrowing.
Rauner slashed at the Democrats’ spending plan, $7.5 billion out of whack, warning it calls for an income tax hike to 5.5 percent after November when lawmakers are relieved of election pressures.
Senate Minority Leader Christine Radogno, R-Lemont, declared that the Republicans’ proposals were affordable and passable before the midnight deadline. House Minority Leader Jim Durkin, R-Western Springs, calling Madigan’s budget plan “a slap in the face to every Illinoisan,“ and arguing that the Republicans’ rival fully-funded stopgap spending measure was not based on IOU or scrip.
The governor is scheduled to discuss his fully-funded stopgap budget and “clean” education bill at various state government entities and social services agencies around the state on Wednesday.
Sweeping ramifications
Entering another year without a budget will jeopardize the state’s financial status and funding already on thin ice.
The governor’s short-term spending plan would have breathed some relief into the struggling social services programs helping the elderly, the poor and the disabled, which haven’t received any state aid in nearly a year. Rauner has not yet decided whether he’ll sign the $700 million to float related agencies approved by the legislature two weeks ago.
The governor said Tuesday the state’s bond ratings, the worst among all states, would benefit from a combination of a balanced budget, strong economy, best schools, lower property taxes, and term limits on elected officials.
The bond ratings risk further downgrading as the government’s deficit continues to grow. Investors demand yields of 3.5 percent on the state’s 10-year general obligation bonds, about 1.8 percentage points higher than top-rated debt of other states, according to data compiled by Bloomberg.
The state continues its year-long struggle to resolve its unfunded pension liability, recently estimated at $111 billion, as new revenues elude Illinois amid political standoff and pension-restructuring efforts failed in the state Supreme Court.
Meanwhile, current spending runs more than $500 million a month over what the state takes in, indicating that by June 30 Illinois will be $6.2 billion more in the red, state Comptroller Leslie Munger said in February.
