Illinois Governor Vetoes Budget Deal; Legislators Begin Override

Enlarge this image toggle caption Seth Perlman/AP Seth Perlman/AP

Updated 4:30 p.m. ET Thursday, July 6

After two years of unpaid bills and dwindling cash reserves, lawmakers in Illinois have finally managed to break a stalemate and reach a long-overdue budget deal — which was promptly vetoed by the governor.

Gov. Bruce Rauner posted a photo on Twitter, showing his veto stamp in action and emphasizing that he was vetoing a "permanent income tax increase," he wrote. He also nixed the rest of the budget deal, the Chicago Tribune reports.

Lawmakers vow to override the governor's veto. On Tuesday, the Senate voted to move forward despite the veto; now the bills will head to the House for the final override vote.

The state hasn't passed a budget in more than two years, accumulating a $15 billion backlog of bills as a bitter political fight played out. As Brian Mackey of Illinois Public Radio reported last week, the crisis has been largely invisible for most state residents, but the state comptroller warned that the crisis could soon affect public schools.

On Tuesday, lawmakers came to a hard-fought agreement. "Under threat of 'junk bond' status, Democrats finally convinced more than a dozen Republican lawmakers to break with Illinois' Republican governor," Mackey reports.

The deal "includes an unpopular income tax increase," Mackey reports. "State Sen. Dale Righter is one of the Republicans who was persuaded to vote for it." The lawmaker said: "Every dollar that we throw onto the backlog of bills is another dollar that the next generation has to pay for even though we got to spend it."

The $36 billion spending plan would bring in an extra $5 billion in revenue, mostly by raising personal income taxes from 3.75 percent to 4.95 percent — a tax hike of nearly a third. The increase would be permanent, unlike the temporary hike Rauner had called for.

The Associated Press reports that the governor had also insisted on "restrictions on the compensation program for injured workers and state-employee pensions [and] a four-year statewide property tax freeze" — provisions that weren't in the deal that he vetoed.

"The epic political showdown started after Rauner took office in 2015, vowing to cut taxes and reduce the influence of Illinois' powerful public-sector labor unions," Mackey reported for NPR. The result has been a sort of "stealth government shutdown," he writes:

"Most of the state government is still largely functioning through a series of court orders. ... "There are hundreds of programs [that] haven't been paid — for homeless teens, AIDS patients and victims of domestic violence. But this aspect of the state budget crisis is happening largely out of public view. "In fact, almost two-thirds of Illinoisans say they have not been affected by the stalemate, according to a poll earlier this year. " 'I figure they'll get it together sometime,' said George Cowper, a retiree who lives in Springfield and says he's been unaffected by the standoff. "The lack of public pressure has made it easier for each side to stay in its corner."

But the looming threat of a "junk" bond rating helped nudge lawmakers toward middle ground.

Rauner, meanwhile, isn't moving. In a post on Facebook over the weekend he vowed to veto the deal.

"Moving forward," he wrote, "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."