Statement from the office of Illinois Senate President John J. Cullerton. Please attribute to spokesman John Patterson.
The Illinois Senate will be in session Tuesday morning to vote on a balanced budget.
The Senate President attended a leaders meeting this afternoon with the expectation of finalizing an agreement on workers compensation and property tax relief legislation as part of the ongoing effort to win the governor’s signature on a balanced budget. Unfortunately, the Republican leaders skipped the meeting.
The Senate is committed to finishing the work it began in January and hopes to finally find bipartisan agreement to put an end to this chaos and restore stability to our state.
I think what you saw with Republicans engaging in bipartisan support of the [tax hike] bill, in my judgement, was a reaction to the positions adopted by Gov. Rauner; the tactics employed by Gov. Rauner and his staff over several months.
So, we have not had a normal legislative process in the Illinois legislature. There’s been an undue level of intimidation by the governor and his staff relative to people in the legislature. […]
Despite what the Tribune says about me, I only engage in persuasion. I work with my members. We thoroughly discuss these issues in our caucus. My method is to use intellectual persuasion, to persuade Democratic members and sometimes Republicans on the wisdom of a position or a vote. I don’t engage in intimidation. I don’t engage in threats. And you won’t find one member of the legislature who would ever tell you that… I’ve been here long enough to know that it doesn’t work.
“Persuasion” can sometimes be in the eye of the beholder. Also, he doesn’t have to issue threats because people already know what crossing him entails.
I will veto Mike Madigan’s permanent 32% tax hike. Illinois families don’t deserve to have more of their hard-earned money taken from them. pic.twitter.com/7F9xkl2S5X
Moving forward, this vote shows that if the legislature is willing to pass the largest tax hike in state history with no reforms then we must engage citizens and redouble our efforts to change the state.
* Speaker Madigan told reporters today that he “would move to override” all three bills the House has passed over the past couple of days. Those would be the tax hike, the approp bill and the BIMP.
Those are all Senate bills, however, so the Senate Democrats would have the first crack at an override motion, and they have their own issues right now. But Madigan predicted the Senate would approve the bills.
* Madigan said he thought the two Republican leaders “should have been here” for today’s scheduled meeting of the four tops.
The House Speaker said he would schedule another meeting tomorrow at 10 o’clock in the morning..
“We’re continuing to work on what we call the ‘off-budget’ issues,” Madigan claimed. “We will continue to work with [the Republicans] until it’s resolved.”
* Senate President John Cullerton just told reporters that the two Republican leaders did not attend today’s leaders’ meeting, which had been scheduled to begin at 1 o’clock.
I told subscribers earlier today that this might happen. After yesterday’s tax hike vote, the Republican leaders wanted to avoid “negotiating the terms of their own surrender.”
Cullerton told reporters that he was still very willing to work on non-budget issues like workers’ comp and a property tax freeze. “We are still ready to move legislation regarding reforms, not just what the House has acted on, pending caucus talks,” Cullerton said.
* When asked whether he had enough Democratic votes to pass the tax hike on his own, Cullerton said he’d have to ask his caucus first, but said it would be “very difficult” to do it without GOP votes. The Senate Democrats put 32 votes on SB 9 in May, but they’ll need 36 to pass it this time around.
As I also warned subscribers, Cullerton said he had some missing members today.
Below is a statement from State Rep. Steve Andersson (R-Geneva) on his support of the budget compromise that passed the House on Sunday with bipartisan support.
Yesterday I voted to create a balanced budget for the State of Illinois for the first time in more than 2 years by voting for SB 6 and 9. In addition to reducing spending by approximately 3 billion dollars, we needed to also increase revenue, which required an income tax increase to slightly lower than what Illinoisans were paying in 2014. I did not want to vote for a tax increase, and like my fellow Illinoisans, I do not want to pay a tax increase. However, it was, at this juncture, the only viable option.
Why? Here are the realities that we faced that led us to this place:
1. If we had not acted, as the bond markets opened today, the State would be downgraded to junk status- the first time for any state in the entire country. “Junk” is more than just a clever name. With a junk rating, most institutions legally cannot buy our bonds. This makes our ability to borrow virtually non-existent which is essential to even keeping minimal state services functioning. Without funding, our universities and community college faced de-accreditation. This would gut our institutions of higher education which not only are commercial drivers in the state, supporting entire communities, but provide education and opportunities keeping our students in Illinois to help build the future of our state. Instead, those students would be uprooted in the middle of their education, and they would have to find alternatives, if that is even possible.
2. The Comptroller advises that starting in July the state’s cashflow will enter a stage where we won’t have enough money to pay our core bills (these include items such as bond interest payments, state employees’ salaries or anything else) because we will only be paying back due bills. In other words, Illinois will have no money at all for expenditures, and being in junk bond status, no ability to borrow. Further, last week a Federal Judge ordered the state to prioritize payment of back due Medicaid payments to the tune of 600 million dollars a month in addition to everything else we are required to pay. It is not an exaggeration to say that there was the very real possibility that the state of Illinois would not be able to survive this added burden.
Simply put, the state was out of money and about to actually shut down and we were out of time as key financial raters threatened to reduce the credit rating of the state as soon as Monday. Yesterday was the absolute last chance to avoid this catastrophe and absolutely, the last and final resort we had.
Of course, nobody wants a tax increase.
Some have argued to “hold out” and pass a better designed budget with just budget cuts. This would require cutting as much as 45% of anything that was “cutable”. This means police, fire protection, schools, higher education and social services. The reality is “cuts only” did not have the votes. Without the votes, even the best budget will never become a reality. And in this case those votes simply did not exist and would not exist.
So, we were left with two bad choices and only two bad choices. As your legislator, I was sent here to govern and I had to pick the least bad of the two horrible choices. I chose to save the state first and continue to fight for reforms. The other option was to me unthinkable, irresponsible, and immoral. To allow the state to fail was in my eyes, just not an option. If I allowed that to happen, the resulting damage would spell disaster for our state and be decades in the recovery, if at all.
Now as a result of this action, the State can live on. More negotiations can and are happening and we continue to have a chance to improve our state. The other choice effectively ended the State of Illinois. As my friend Rep. David Harris said, I was not elected to preside of the destruction of our great state. That was not an option for me, either - I chose survival for the State of Illinois. And I believe I made the right choice given the circumstances.
* Meanwhile, Rep. John Cavaletto (R-Salem) explained his vote for a tax hike to a local radio station…
Cavaletto said the turning point for him came when the Republican caucus was given information on the devastating impact and scary situation the state’s bond rating being reduced to junk status would have on Illinois. He questioned how the state could build itself back from the bankrupt situation and said an increase in the income tax didn’t worry him as much.
Cavaletto said you could have heard a pin drop in the Republican caucus after the presentation.
“I hate tax increases, hate them, and it will hurt small business to do this, but I also think it hurts small business when you ask them to do business with the state and then you don’t pay them,” she said. “We must have a balanced budget, and if that means that we must increase taxes right now to do it, I, like one of my other colleagues, know I’m probably going to get primaried on this,” she said, referring to the possibility of losing her seat in the next primary election.
“Do I want to raise taxes? Absolutely not. Do I think it’s the right thing to do down the road? Absolutely not. But I want you to remember what we’re doing here today. We’re paying the bills for our bad behavior, even before I came here.”
“There are a couple of organizations in the state that are extremely far right, and their preference is to burn the place down and then build it back up again, and they are never going to think it’s ok to vote for a tax increase. “
If Rauner does veto the plan, he will be able to run for re-election without the albatross of having been the Republican responsible for permanently bringing the income tax rate up from 3.75 to 4.95 percent—a 32 percent jump.
That’s only if the GA successfully overrides him (or even tries). But, yeah. I and others have been saying this for weeks and weeks. A veto override gives the governor all the benefits of the new state revenues and the anti-tax political issue.
In voting for the tax hike before Rauner’s sought-after reforms, the governor loses leverage in future negotiations.
But [Rep. Steve Andersson, R-Geneva] says Democrats still have incentive to work with Rauner on his [non-budget]wish list.
“The governor still needs to sign this,” he said. “There is a motivation to get to a ‘yes’ from him so that we don’t have to come back and override”—something there is no guarantee would succeed.
Rauner has repeatedly threatened to veto a permanent income tax hike unless it’s tied to a permanent property tax freeze, and the bill the House passed was a permanent income tax hike.
The increased likelihood that Illinois (BBB-/Watch Neg) will soon have a budget in place is a development with significant credit implications, in S&P Global Ratings’ view. Passage of tax and spending legislation by Illinois’ House of Representatives on July 2 represents a meaningful step toward the enactment of a comprehensive budget for fiscal 2018.
We had previously indicated that, in our view, because of the state’s structural deficit and the magnitude of its unpaid bills, its fiscal trajectory was unsustainable. More immediately, a recent federal court ruling (and the potential for others) compelling the state to fund more of its obligations each month threatens to provoke a liquidity crisis. The protracted failure of Illinois’ lawmakers to assert governing control over the state’s finances has, in effect, begun to directly undermine the state’s discretion over the allocation of its resources.
Enactment of a comprehensive budget with revenue and expenditure alignment could help put a halt to this erosion of the state’s sovereignty over its fiscal affairs. In this way, the legislation passed by the House could represent the first step in a stabilization of Illinois’ fiscal outlook and may lead to an easing of pressure on the state’s credit quality.
Even with a budget, however, it’s likely that Illinois’ finances would remain strained and vulnerable to unanticipated economic stress. In addition to having accumulated record amounts of payables, the state’s university system has been deprived of state funding since January 2017. If a budget is enacted, the degree to which it closes the state’s structural deficit, provides a pathway for addressing the backlog of unpaid bills, and its impact on cash flows, will be important factors in our review of its effect on Illinois’ credit quality.
Conversely, in the event progress toward a budget falters, the weakened condition of Illinois’ finances and liquidity provide it with minimal margin at its current rating level, as detailed in our June 1 CreditWatch placement statement.
* Starting right now and running through the remainder of this overtime session, I’m banning the use of exclamation points in comments. If you use an exclamation point, your comment will have to be approved manually - by me - and it will only be approved if you use it in a humorous, ironic or other acceptable manner. I’m sick of the uptick in shouting, particularly from the newbie trolls on both sides. Yeah, tensions are high, but go scream on Facebook if you feel such urges. Get it out of your system and then you can come back here.
If I could, I’d also ban the use of all capital letters, but I’m not able to do that. I’d love to ban the improper use of “your” when it’s used as a contraction of “you are.” I’d also love to ban the misspelling of “lose” as “loose,” or “ad” as “add,” or “moot” as “mute.” Alas, none of that can be done, either. But lemme tell ‘ya, that stuff drives me up a wall when I see it.
* The Question: What word or words would you like to see banned from the comment section? Explain.
House Democratic women request meeting with Gov 2 implore him to retract his threat to veto the budget & save our state from junk status. pic.twitter.com/pY3AxYnDCx
— Rep Sara Feigenholtz (@StateRepSara) July 3, 2017
Sit in by House Democratic women in Gov Rauners office demanding a meeting to save our state and keep schools open!! #DoYourJobpic.twitter.com/DL1T4pwkeU
GOP Reps. Barbara Wheeler, Keith Wheeler, Margo McDermed, Grant Wehrli, Tony McCombie, Lindsay Parkhurst, Jeanne Ives and Peter Breen showed up.
The group of anti-tax Republicans whipped out their own phones and apparently started asking the Democrats about their tax hike plan. The Democrats then returned to the floor. I’m hoping to find video of the latter exchange. If you see it somewhere, post a link in comments.
…Adding… From the Democratic women…
“We believe now is the time to end this state budget impasse and yesterday’s votes are an important step toward a solution. Our group today visited the Governor’s office to request a meeting with the Governor to ask him to approve this package.
We have made significant compromises and have seen bipartisan support for a balanced budget. Rather than issuing veto threats, we want to meet with the Governor to explain why this is the right solution and hope he will meet with us soon.”
* This is a huge blow to the Illinois House. Bipartisan, hard-working, tenacious and an all around good guy…
State Representative Chad Hays (R-Catlin) announced today that he will not seek reelection in 2018. He has served in the General Assembly since December of 2010 and as Assistant Minority Leader since 2013.
“Serving in the Illinois House of Representatives has been a supreme honor and a tremendous privilege,” said Hays. “I have been a passionate advocate for Vermilion and Champaign Counties and the East Central Illinois area, and sincerely appreciate the opportunity to temporarily occupy the seat representing the 104th District.”
Hays pointed to a changing political climate in Springfield as a contributing factor of his upcoming exit from State politics. “The functionality of the Illinois General Assembly today is simply untenable and counterproductive,” said Hays. “Legislators who care deeply and have the courage of their convictions and the intestinal fortitude to do what is right regardless of consequences are increasingly silenced. I believe we are in serious jeopardy of independent thought being a relic in our public discourse.”
The current dislike and distrust between the Governor and Speaker of the House has paralyzed government in Illinois. Ego, money and power eclipse the desire of well-meaning and honest public servants. Blame, press conferences and talking points have replaced governing. Voices of moderation and reason are increasingly elbowed out by well financed fringe elements.
Our State faces financial calamity due to years of spending well beyond its means and the collective inability of leaders to put petty, partisan differences aside for the common good.
The Governor’s office has struggled with identifying which fights to fight and what constitutes victory. Politics is the art of the doing the doable, particularly when you are in the minority. The pathway to success for the Administration is to seek and build upon incremental progress.
The rules of engagement in the House of Representatives are the conduit to one man unilaterally controlling the Legislative process in a total and complete end run around Democracy. The stifling nature of the House Rules render “we the people” void of a voice or even a venue from which to be heard. The House has become a remote outpost in relation to what our Founding Fathers had in mind.
There truly are legislators who care deeply, have the courage of their convictions and the intestinal fortitude to do what must be done regardless of consequences. They are increasingly silenced and dwarfed by monied bullies. We are in serious jeopardy of independent thought being a relic in our public discourse.
The functionality of the Illinois General Assembly today is simply untenable and counterproductive.
* For months, newspapers, pundit, etc. have been screaming “Get a budget!” So, what happens when the House passed what appears to have been a balanced budget? Check out the headlines…
* Tribune: Madigan’s House approves major income tax hike as Republicans break with Rauner
* Sun-Times: Illinois House OKs income tax hike, spending plan; Rauner vows vetoes
* AP: Rauner says he’ll veto hike in Ill. income tax
* Daily Herald: Rauner promises to veto income tax hike
All tax hike, all Rauner veto, all the time. With a sprinkling of “Madigan!”
Polling consistently shows that Illinoisans do not want a tax hike. So, from that perspective, Gov. Rauner “won” today’s headline war.
*** UPDATE 1 *** From the Illinois Republican Party…
Hey Rich,
In addition to the headlines you posted, Governor Rauner’s message is also cutting through the clutter on social media. The Governor’s veto message on the Bruce Rauner Facebook page was the farthest reaching organic post ever for Rauner. That post has already organically reached over 300,000 individual newsfeeds.
Taken together, posts from Rauner and ILGOP pages about Madigan’s tax hike and last minute budget organically reached over 550,000 newsfeeds since yesterday. That’s not even including the Governor’s official side veto post, which received even more shares.
The prospect of Madigan’s massive tax hike - the largest in state history since it is a permanent increase - is activating voters who otherwise have been passive observers of the impasse so far.
* From Comptroller Mendoza’s statement last night…
We still have a long road ahead to a comprehensive budget plan to pay down our $15 billion backlog of unpaid bills that has tripled in the two years since Governor Rauner took office.
It’s actually worse than that. Except for K-12, last year’s stopgap budget only contained appropriations for half the year. Universities, social service groups, business vendors, etc., etc., etc. never got an appropriation for the second half of Fiscal Year 2017, which ended Friday.
The second half of FY 16 ended the same way and the state’s leaders just sent that down the memory hole.
So, they not only need to deal with most of that backlog (they don’t have to deal with all of it at once, just as long as they can get it down to a 30-day payment cycle), they also have to figure out what to do about the billions they never got around to appropriating in the first place.
* Aside from passing a temporary tax and then not preparing for its partial rollback, the other giant failure of the Democrats in 2011 was not dealing with the overdue bills. That debt was like a massive ball and chain being dragged around by the government’s neck, and it didn’t get resolved for four years, helping to convince folks that the tax hike “didn’t work” and that Pat Quinn was a failed governor. Borrowing to pay off that debt would’ve done wonders for Quinn, and so I’m curious whether the Democrats will “help” Rauner out this time.
The Illinois House of Representatives on Monday passed a bill for the final piece of the state’s fiscal 2018 budget that includes authorization for $6 billion of bonds to pay down a $15 billion bill pile.
The budget implementation bill was sent to the Senate on a 72-36 vote. The House on Sunday passed appropriation and revenue bills that require concurrence votes in the Senate.
In passing the budget implementation bill, a dozen House Republicans joined majority Democrats to reach a 73-vote threshold that could withstand a possible veto by the governor if the measure passes the Senate. Republican Governor Bruce Rauner has already said he will veto the revenue bill that includes a big income tax rate hike. […]
State Representative Greg Harris, the House Democrats’ budget point person, said enough money has been identified only to cover debt service on $3 billion of bonds and that the rest of the debt could be issued once additional revenue is available.
Sigh.
$3 billion is almost a point on the income tax.
There’s also some dispute over the language in the BIMP about when the bonds are supposed to be paid back.
Rep. Sue Scherer, D-Decatur, voted for the spending bill but against the tax increase legislation.
* By my count, 11 House members did the same thing. Just one was a Republican (Dave Severin). The rest were Democrats who are either considered targets or think they are…
* Rep. Scott Drury voted “Yes” on the tax hike and “No” on the spending bill. Rep. David Harris voted for the tax hike, then didn’t vote on the approp bill. Rep. Michael McAuliffe voted against the tax hike, then didn’t vote on the spending bill.
Over the weekend the State of Illinois made concrete progress on reaching an agreement to break the two-year long budget impasse, according to Fitch Ratings. The state House of Representatives passed both spending and revenue measures with some bipartisan support in special session on Sunday. The tax increase legislation, an amendment to Senate Bill 9, would permanently raise the personal income tax rate to 4.95% and make other revenue enhancements. There is also apparent accord on significant budget reductions to align spending with expected revenues. The bills now return to the state Senate for concurrence, where a super-majority vote is required to raise taxes. The governor has threatened to veto the revenue increase although there appear to be sufficient votes to override the veto
Fitch downgraded Illinois’ rating to ‘BBB’ on Feb. 1, 2017 and maintained the rating on Rating Watch Negative. At that time, Fitch indicated that the Rating Watch would be resolved within six months based on an assessment of the state’s fiscal trajectory as it starts fiscal 2018 and that failure to enact a balanced budget for fiscal 2018 would result in a further downgrade.
Fitch will continue to monitor the developments in Illinois. Enacting a budget that sets the state on a path toward budgetary balance and provides a means to address the state’s accumulated budgetary liabilities would stabilize Illinois’ Issuer Default Rating and related ratings. Temporary or partial measures, or a failure to enact a budget within the context of this session, would result in a downgrade. The continuation of spending without sufficient revenues, particularly in light of the ongoing legal challenge to the state’s prioritization of other payments ahead of Medicaid payments, will increase liquidity pressure. The state risks losing full control of its budgetary decisions, which would be inconsistent with the current rating.
