Illinois House OKs budget, ends impasse

Governor’s veto overriden; state hikes income tax some 32 percent

SPRINGFIELD, Ill. — The Illinois House voted Thursday to override Gov. Bruce Rauner’s vetoes of a budget package, giving the state its first spending blueprint in more than two years and ending the nation’s longest fiscal stalemate since at least the Great Depression.

Although the vote will help ease some financial woes, the new budget will be fueled by a permanent 32 percent income tax increase, and it includes spending cuts. Illinois’ finances are significantly worse than when the impasse started in 2015.

The Legislature has been meeting in a special session called to deal with the budget crisis. The session was widely seen as a battle between the first-term Republican governor, a former private equity investor, and longtime Democratic House Speaker Michael Madigan of Chicago.

Lawmakers approved the bill to raise taxes by a 7142 vote. The spending bill passed 74-37. It takes 71 yes votes to override a veto.

Rauner rejected the measures because, he said, he saw no indication the Democratic-controlled Legislature would send him the “structural” changes he’s demanded. Those include a statewide property tax freeze, cost-cutting restrictions on compensation for injured workers, changes to pension benefits for state employees and reforms making it easier for voters to merge or eliminate local governing bodies.

The income tax increase means individuals will pay 4.95 percent instead of 3.75 percent. The corporate rate jumps to 7 percent from 5.25 percent.

The standoff, which entered a third fiscal year July 1, had effects statewide. Road construction work shut down. Public universities were cut to the bone and faced a loss of academic accreditation. The United Way predicted the demise of 36 percent of all humanservices agencies in Illinois by year’s end.

Wednesday, Moody’s Investors Service, put Illinois under review for a downgrade in creditworthiness even if lawmakers overrode the veto. Moody’s said the House package does not address the state’s massively underfunded pensions or do enough to pay down bills.

Illinois has a $6.2 billion annual deficit and $14.7 billion in overdue bills.