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Illinois House Democrats push new budget plan to end impasse

CHICAGO (Reuters) - Staring down the start of a new fiscal year, Illinois House Democrats offered a budget on Tuesday that would spend less than the Republican governor’s plan, but kept their specific revenue-raising proposal under wraps.

FILE PHOTO - Illinois State Representative Michael Madigan, left, addresses state representatives after he was re-elected as Speaker of the House at the University of Illinois campus in Springfield, Illinois, U.S., January 11, 2017. REUTERS/Joshua Lott

An impasse between Governor Bruce Rauner and Democrats who control the legislature has left Illinois without complete budgets for an unprecedented two-straight fiscal years. The nearly $36.5 billion general funds budget was the first spending blueprint offered by House Speaker Michael Madigan for the fiscal year that begins Saturday.

Illinois still has a trek to get to a full-year budget and avoid being the first U.S. state to have its credit rating downgraded to junk.

“I’m not saying this is perfect,” Madigan told reporters in the state capitol of the Democrats’ proposal. “I’m not saying it completely meets every request of the governor. But I think it goes a long way to giving the state of Illinois a good solid spending plan that responds to the real needs of the state.”

But House Republican Leader Jim Durkin, whose members’ votes will be required to reach a three-fifths majority vote threshold, said his caucus could not judge that budget without seeing a companion revenue bill.

“Based on Democrats’ past action, I can’t take their word this is a balanced budget,” he told reporters.

State Representative Greg Harris, Madigan’s point person on the budget, said House Democrats’ goal was “to live within the confines” of a revenue bill the Senate passed last month.

That measure, which passed with only Democratic votes, would boost revenue by $5.5 billion by permanently raising the flat personal income tax rate to 4.95 percent from 3.75 percent and the corporate tax to 7 percent from 5.25 percent, eliminating corporate tax loopholes, and expanding the state sales tax to certain services such as dry cleaning and storage facilities.

Durkin said his members want to tie the longevity of any tax hike to the duration of a local property tax freeze. While House Democrats have offered a four-year freeze, it was unclear how long higher tax rates would stay in place.

“They will not show their cards on that,” Durkin said.

He also questioned Madigan’s plan to hold votes Wednesday on Democrat-drafted legislation aimed at satisfying Rauner’s demands for reforms, saying it was “not healthy” for the process.

Senate Democrats last month passed their own budget, which mirrors Rauner’s $37.3 billion spending target.

Reporting By Dave McKinney and Karen Pierog; Editing by Andrew Hay