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Illinois Republicans warn against repeat of partial state budgets

CHICAGO (Reuters) - Illinois Governor Bruce Rauner on Monday called on state lawmakers to pass a full-year fiscal 2019 budget that adheres to a revenue estimate and not a partial spending plan meant only to get the state past the November election.

Illinois Gov. Bruce Rauner speaks to the news media outside of the United States Supreme Court in Washington, U.S., February 26, 2018. REUTERS/Leah Millis

The Republican governor, who is running for a second term against Democrat J.B. Pritzker, also urged lawmakers to send him a bill aimed at saving Illinois as much as $1 billion in pension costs annually before the spring legislative session ends on May 31.

Rauner’s request followed a similar warning on Sunday from Illinois’ Republican House leader. State Representative Jim Durkin said in a radio interview it would be “dangerous” to pass only a partial budget, which would put funding for social services, public schools and other parts of the state government in peril.

But Steve Brown, spokesman for Democratic House Speaker Michael Madigan, said on Monday the Republicans “are the only ones talking about a six-month budget.” Democratic Senate President John Cullerton wants stability and a full-year budget, according to his spokesman John Patterson.

Illinois’ $130 billion unfunded pension liability and the fact that an impasse between Rauner and Democrats left the state without complete budgets for an unprecedented two-straight fiscal years have pushed the state’s credit ratings to just a notch or two above the junk level.

The enactment of a fiscal 2018 budget and $5 billion income tax rate hike over Rauner’s vetoes in July saved the already lowest-rated U.S. state from sliding into junk.

Illinois’ political problems were cited by all three credit rating agencies in recent reports that said any worsening of the state’s chronic unpaid bill backlog, which hit a record $16.67 billion last year as a result of the budget impasse, could lead to a downgrade.

“A re-emergence of political stalemate that negatively affects fiscal operations, including a material increase in accounts payable, could trigger a downgrade,” Fitch Ratings said on Monday.

Rating agencies have also questioned the feasibility of parts of the $37.6 billion general funds budget Rauner proposed in February.

Rauner, meanwhile, wants $1 billion in pension savings to reduce last year’s income tax hike. A bill, which passed the Senate last May and has languished in the House so far this year, would give state workers and teachers hired before 2011 a choice of counting future raises they may receive toward their pensions or receiving retirement payments that include a 3 percent annual cost-of-living increase.

Reporting by Karen Pierog; Editing by Matthew Lewis