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Illinois Finally Approves A Budget After More Than Two Years Without One

By Heather Cherone | July 6, 2017 4:48pm | Updated on July 6, 2017 5:06pm
 The Illinois Statehouse.
The Illinois Statehouse.
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CHICAGO — After more than two years without a budget — and the state's credit rating poised to topple into junk territory — Illinois lawmakers finally approved a $36 billion spending plan over the objections of Republican Gov. Bruce Rauner.

After a vote was delayed by several hours by an emergency response prompted by a report that a woman sprinkled white powder throughout the capitol building, 10 Republican members of the Illinois House ignored the governor's call not to override his veto, saying the state could not afford to allow the crisis to continue.

The final vote — 71-42 — passed with the minimum number of votes.

Rauner's veto was overridden on July 4 by the Illinois Senate.

Several hours before the vote, Mayor Rahm Emanuel said the "toll of the manufactured crisis has been too much."

After the vote, Emanuel blasted Rauner.

"Like so many others across the state, I wish the governor had been willing to actually compromise at some point in this process because the only thing his my-way-or-the-highway approach has gotten Illinois is nearly three years of gridlock and $15 billion in unpaid bills," Emanuel said in a statement. "Thankfully, today’s bipartisan, balanced budget is the first step in bringing stability and certainty back to Illinois and putting our state back on track.”

In a statement posted on his Facebook page, Rauner said the veto override was "was another step in Illinois’ never-ending tragic trail of tax hikes."

Here's what's in the budget passed Thursday:

State income taxes are going up.

To generate $4.3 billion, Illinois residents will see their personal income taxes rise from 3.75 percent to 4.95 percent. State lawmakers also hiked the corporate income tax rate from 5.25 percent to 7 percent to generate another $460 million.

Rauner slammed the tax hike as a "32 percent permanent income tax [rate] increase" in his veto message posted on Facebook. The governor had supported a temporary tax hike of the same size — in return for a property tax freeze and changes to workers' compensation, which Rauner has said will kickstart the state's economy.

The deal includes neither provision.

• Schools will open on time in the fall.

The spending plan includes an additional $350 million for kindergarten through 12th-grade classrooms. But that portion of the budget hinges on a separate piece of legislation that changes how much each school district gets from the state.

Because the bill gives the Chicago Public Schools more state money to cover both current and past due pension payments, Rauner has called it a Chicago "bailout" and threatened to veto the school-funding formula, which has not yet reached his desk.

• The package changes the way Chicago funds some of its employee pensions.

The package allows Chicago to pay more toward the pensions of about 88,000 city workers while changing the way pensions work for employees hired after Jan. 1, 2018.

The measure would allow the city to contribute millions more a year to the city workers’ and laborers’ pension funds using revenue generated by a 30 percent increase in the water and sewer tax approved by the City Council last year.

New employees could retire at age 65 after contributing 11.5 percent of their salary annually to their pensions — 3 percentage points more than employees contribute now. Employees hired after Jan. 1, 2011, could chose to contribute 11.5 percent to their pensions and retire at 65 or keep paying 8.5 percent and work until they are 67.

The legislation also requires Chicago aldermen and elected officials to serve longer to earn a pension of 80 percent of their city salary.

• Chicago nonprofits — which haven't seen a state check for years — will get paid.

The deal includes about $8 billion to begin paying down $15 billion in unpaid bills the state accumulated during the budget impasse. That's good news for nonprofit organizations like Family Focus, which had been on the verge of laying off 70 percent of its staff.

• Grants for Chicago college students will be paid — and colleges will get paid back.

The spending plan sets aside $365 million for universities and colleges to use to cover the scholarships they advanced to low-income students earlier this year. The budget includes $400 million for the scholarships to pay for tuition for classes starting this fall.

The package also would restore funding to schools like Northeastern Illinois University in North Park, that was forced to lay off employees to cover a $17 million shortfall created by the budget impasses.

However, state universities would see their budgets cut 10 percent going forward as part of an across-the-board belt-tightening that helped win the spending plan's passage. Other agencies and programs will see a 5 percent cut as part of the agreement.

• Teachers — and parents — will get a (small) break.

The spending plan includes a new tax break of $250 for teachers who spend their own money to buy school supplies — and increases the Education Expense Tax Credit to $750 per family from $500 per family.


Here's What The Budget Deal Means For You

Here's How Much More You'll Pay Under New Income Tax