Spending precedes revenue as Illinois House passes budget bills

CHICAGO Thu May 15, 2014 9:32pm EDT

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CHICAGO May 15 (Reuters) - Democratic lawmakers pushed dozens of fiscal 2015 appropriations bills through the Illinois House of Representatives on Thursday over protests largely from Republicans that the money does not exist to pay for higher spending.

The bills for the budget that takes effect July 1 were based on Governor Pat Quinn's preferred spending plan that calls for making permanent higher income tax rates that were put in place in 2011 and are scheduled to partially expire on Jan. 1. But instead of voting first on the taxes, Democratic House Speaker Michael Madigan decided to start with appropriations.

"Our purpose in advancing the budget first is to set the bar against which we will work to convince people to vote for the revenue," Madigan told reporters on Wednesday.

At the beginning of Thursday's marathon budget session, House Republican Leader Jim Durkin said that the budget process was taking the wrong turn.

"We are voting today for an unconstitutional budget, plain and simple," he said.

Republican lawmakers complained that Democrats ignored the chamber's agreed-upon $34.5 billion general fund revenue target and instead passed $37.35 billion in spending that requires revenue from the higher income tax rates.

Christopher Mooney, director of the Illinois Institute of Government & Public Affairs at the University of Illinois, said Illinois lawmakers face a tough choice of voting for higher taxes going into November's general election or enacting a budget with significant spending cuts.

As for the legality of the House's action so far on the budget, Mooney said the budget is not officially passed until both chambers approve the same spending and revenue plan.

The bills now head to the Democrat-controlled Senate, where Senate President John Cullerton is confident he has the necessary votes to make the income tax rates permanent, according to his spokeswoman Rikeesha Phelon.

"We have a number of members that are more interested in the traditional approach to constructing budgets," she said. "So they are hopeful that the house will send the revenue bills to support the budget shortly."

Meanwhile, Illinois, which is sinking under a $100 billion unfunded public pension liability, will have to delay implementation of controversial pension reforms until a state judge determines if the law, passed in December, is constitutional. Those reforms aim to save the state about $145 million over 30 years.

On Thursday, Standard & Poor's Ratings Services and Fitch Ratings said that Wednesday's ruling by a Sangamon County Circuit Court judge, stopping the law from taking effect on June 1, will not affect Illinois' credit ratings, which are the lowest among the states.

Also on Thursday, the Illinois Attorney General's office filed responses to lawsuits brought by unions, retiree groups and others, contending the law is a permissible exercise of the state's sovereign powers in light of the magnitude of the pension funding problem. (Reporting By Karen Pierog)

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