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Illinois ends spring session without a FY 2017 budget

SPRINGFIELD, Ill. (Reuters) - The Democrat-controlled Illinois Legislature ended its spring session late Tuesday, failing to produce a full fiscal 2017 budget to tackle financial woes or even a plan to fund schools.

Republican Governor Bruce Rauner Bruce Rauner campaigns in Arlington Heights, Illinois in this file photo dated October 28, 2014. REUTERS/Jim Young

Hours before the session ended Republican Governor Bruce Rauner chastised Democrats for their “stunning failure” on the budget front.

“We’re like a banana republic. We can’t manage our money,” he said at a news conference.

A House-passed budget that Rauner vowed to veto for being more than $7 billion short on revenue failed badly in a Senate vote.

Illinois has limped through fiscal 2016 as the only U.S. state without a complete budget, operating under court-ordered spending, and continuing and stopgap appropriations.

The governor last year vetoed all but a school funding bill in the Democrats’ budget for the fiscal year that ends June 30.

The impasse between Rauner and Democrats showed no sign of easing and could leave the nation’s fifth-largest state runningon a similar autopilot as the new fiscal year begins July 1.

Vendors, social services providers, state universities, community colleges and others that have received partial or no funding over the last year are reaching breaking point. That in turn could bring widespread operational problems if the state is unable to obtain food, utilities, fuel and other essentials.

“Real people are going to suffer. Real people are going to die,” warned Democratic State Representative Jack Franks.

The legislature also failed to approve a stand-alone K-12 education budget. A $15.7-billion bill to ensure schools open in the fall passed the Senate but was soundly defeated in the House.

Its demise leaves the financially struggling Chicago Public Schools (CPS) without an additional $475 million in funding in part to help pay for rising contributions to teacher pensions. CPS officials have warned of “draconian” spending cuts to deal with a $1 billion budget deficit.

Democratic leaders on Tuesday refused to immediately take up Rauner’s short-term budget plan, shunting it off to a bipartisan working group. Future budget deliberations will be complicated by the fact that a tougher, three-fifths voting majority to pass a bill kicks in on Wednesday.

House Speaker Michael Madigan has made clear his chamber will meet every week during June to work on a budget.

The inability to send Rauner a spending plan exposed an unusual level of dysfunction within the Democratic Party, whose super majorities in both legislative chambers were racked by infighting over how best to confront the 11-month impasse with the governor.

The Senate’s refusal to adopt a budget plan bearing the clear imprint of Madigan, the state party chairman, represented a stinging rebuke to the longest-serving statehouse speaker in America and a setback Rauner allies called a “catastrophe” for Democrats.

Within the 39-member Senate Democratic majority, some senators complained they were unable to have input in the House-passed plan, which arrived last week as a take-it-or-leave it proposition, one of Madigan’s legislative hallmarks over the years in his dealings with Illinois’ upper legislative chamber.

“There was a lot of resentment over the way it was passed,” said Senate President John Cullerton.

Without a budget, Illinois, which already has the lowest bond ratings among the 50 states, risks harming its credit standing further. Credit rating agencies have warned of downgrades if the state fails to tackle its $111-billion unfunded pension liability and huge structural budget deficit.

The governor’s budget office has hired consultants to help disengage from interest rate swap pacts that could cost the state more than $100 million if its ratings fall below specified levels.

Additional reporting by Karen Pierog in Chicago; Editing by Matthew Lewis and Clarence Fernandez