May 23, 2014 / 4:50 PM / 3 years ago

Smaller Illinois budget soundly rejected in House vote

3 Min Read

CHICAGO, May 23 (Reuters) - The Illinois House of Representatives overwhelmingly defeated a revised 2015 general funds budget on Friday that would have spent billions of dollars less than appropriation bills passed by the chamber last week had authorized.

The 5-107 vote left the budget in limbo with just days left before the end of the legislature's spring session.

House Speaker Michael Madigan, a Democrat, had ordered up the revised budget due to a lack of support in his caucus for making permanent the higher income tax rates that came into force in 2011 and are due to partially expire on Jan. 1, the halfway point of the upcoming fiscal year.

A full year of revenue from the higher rates was incorporated into the budget bills the House passed last week.

The amount of difference between the two spending plans was not available from Madigan's office, but Republicans pegged the revised budget at nearly $34.5 billion, down from more than $38 billion in the previous legislation.

Madigan said earlier this week that only 34 Democrats were willing to vote in favor of making permanent the higher personal and corporate income tax rates that were put in place in 2011, far short of the 60 votes needed for passage.

Steve Brown, Madigan's spokesman, said the speaker will continue to work on the budget with House members. He added the chamber's next session will be on Monday.

Governor Pat Quinn, a Democrat, recommended in March a fiscal 2015 budget that incorporated just over $2 billion from the higher tax rates.

State Representative David Harris, speaking for Republican lawmakers, urged a "no" vote on the revised budget legislation after offering suggestions on how to tap into unappropriated money that resulted from a higher revenue estimate for the current fiscal year.

"We can build a better budget," Harris said.

Speaking for Democrats, State Representative Fred Crespo warned that time was running out for lawmakers to pass a budget before the May 31 deadline.

"As of today, the facts are that the tax won't be extended and we're going to have additional pressures next fiscal year, and we have to be prepared to handle that," he said.

The fate of the income tax increase is being tracked by Wall Street credit rating agencies, which already have Illinois at the lowest ratings among states, largely due to its $100 billion unfunded pension liability.

The House did pass an advisory referendum that Madigan proposed for the Nov. 4 state-wide ballot. The measure, which heads to the Senate, would ask voters if they support a 3 percent income tax surcharge on people earning more than $1 million annually. Madigan said such a move would raise just over $1 billion a year that would be sent to school districts on a per pupil basis.

Both the House and the Democrat-controlled Senate are scheduled to wrap up their spring session and the fiscal 2015 budget by May 31. Illinois' fiscal year begins July 1. (Reporting By Karen Pierog; Editing by Peter Galloway)

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