CHICAGO, May 27 (Reuters) - The Illinois House of Representatives on Tuesday passed a third version of a fiscal 2015 budget that would erode some of the progress the state has made on getting its fiscal house in order by relying on one-time revenue measures.
The Democrat-controlled House passed a series of spending bills that sponsors said largely keep funding levels flat as a result of letting higher income tax rates partially expire halfway through the fiscal year. Later in a committee, Democrats took action to increase the revenue estimate for the fiscal year that begins July 1 to $35.35 billion from a previously agreed upon $34.5 billion, according to a spokeswoman for House Republicans.
“The new revenue number we believe assumes a new $650 million interfund borrowing program. This is similar to sweeping funds from other state funds,” said Vicki Crawford, the spokeswoman.
A spokesman for House Speaker Michael Madigan could not be reached for comment.
The budget bills still need to be approved by the Democrat-controlled Senate before the legislative sessions ends on Saturday.
Rikeesha Phelon, a spokeswoman for Senate President John Cullerton, said the budget will allow level funding to preserve key priorities.
“However, the effect of budget is to delay doomsday by borrowing and increasing our backlog of bills,” Phelon said. “Admittedly, this budget reverses some of the progress that we have made in recent years.”
Illinois’ pile of unpaid bills shrank to $4.17 billion last month from $5.3 billion in April 2013, according to Governor Pat Quinn’s budget office.
Madigan told reporters on Monday his chamber would take up a 12-month “middle-of-the-road” budget on Tuesday based on the expectation income tax rates that were temporarily boosted in 2011 will be allowed to partially roll back on Jan. 1.
The governor’s budget office has estimated the state would lose about $2 billion in revenue in fiscal 2015 as a result of the personal income tax rate falling to 3.75 percent from 5 percent and the corporate tax rate dropping to 5.25 percent from 7 percent.
The House initially passed a roughly $38 billion general funds budget on May 15 that depended on the current income tax rates becoming permanent. But Madigan fell far short of mustering the 60 votes among Democratic members needed for the income tax extension. Still, the House last Friday soundly defeated a pared-down budget that cut funding due to the revenue loss from the tax rate rollback.
The latest spending plan was passed over objections of Republicans, who complained the bills landed on their desks just a couple hours before the session began.
“The ink is not even dry on this,” said House Republican Leader Jim Durkin. “How can you vote on this?”
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. (Reporting by Karen Pierog; Editing by Ken Wills)