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Illinois governor orders special session to break budget impasse

CHICAGO (Reuters) - Illinois’ Republican governor, Bruce Rauner, has ordered lawmakers to return to work starting next Wednesday to pass a budget as the clock ticks down to the July 1 start of a new fiscal year.

FILE PHOTO: Illinois Gov-elect Bruce Rauner talks to the media after a meeting with U.S. President Barack Obama at the White House in Washington December 5, 2014. REUTERS/Larry Downing/File Photo

But there is no sign in the Democratic-led legislature that a breakthrough in the 23-month impasse could be imminent.

Rauner warned on Thursday that the inability to pass a budget could bring “devastating and long-lasting ramifications” for the nation’s fifth-largest state. Those include possible “junk” credit ratings, a halt to state-funded road projects, and suspension from national lotteries.

Illinois is limping toward the June 30 end of an unprecedented second-straight fiscal year without a complete spending plan due to an impasse between Rauner and Democratic leaders.

Rauner said he would sign into law a bill package unveiled by Republican legislators on Wednesday that includes a $36 billion budget, a school funding revamp, and several measures he has sought such as a local property tax freeze, term limits for top state officials and cost-saving changes to the system that compensates injured workers. The bills require three-fifths majority votes for passage instead of a simple majority.

“It is a true compromise – and one I hope the majority in the General Assembly will accept,” the governor said in a Facebook video posted on Thursday.

Rauner and Democrats continued to blame each other for the budget crisis.

“House Democrats will continue our work on the budget from Springfield, but as Governor Rauner has met each of our attempts to date with refusal, it’s clear that the onus is on the governor to show that he is finally serious about working in good faith to end the crisis he has manufactured,” House Speaker Michael Madigan said in a statement.

If Illinois still lacks a budget when the new fiscal year dawns, the consequences could be big.

The state’s credit ratings could sink to “junk,” a first for any U.S. state, leaving some investors unable to buy the state’s debt and others to demand even fatter yields.

The state will be suspended from participating in the Powerball and Mega Millions lotteries due to the lack of fiscal 2018 appropriations to pay winning ticket holders, Illinois Lottery spokesman Jason Schaumburg said. The games have generated about $240 million in sales in Illinois so far in fiscal 2017.

With no money to pay road contractors, Illinois’ transportation department is shutting down about 700 ongoing projects that carry a price tag of $2.3 billion, according to department spokeswoman Gianna Urgo.

The budget impasse has ballooned Illinois’ pile of unpaid bills to $15 billion as of Wednesday, fueling litigation by unpaid vendors and others. A U.S. judge has set a June 20 deadline for Illinois to start paying more of the $2 billion it owes Medicaid providers.

Reporting by Karen Pierog; Editing by Matthew Lewis