It’s all up to the Illinois House of Representatives.
Speaker Michael Madigan announced Wednesday that he will call a vote on whether to override the veto of the spending plan and supporting tax increase that both chambers approved over the weekend.
After Gov. Bruce Rauner’s swift rejection on Sunday, the state Senate came back and rejected the veto later that day. The House has not taken up the matter yet, due in part to member absences. But more on that later.
WNIJ asked Dr. Scot Schraufnagel, chairman of the Northern Illinois University Department of Political Science, to take a broad look at the current legislation and offer some comments and comparisons.
He noted that there is not a lot of difference between how the governor’s proposal in February and the recent House version would allocate funds.
“The spending portions are very, very similar,” Schraufnagel said. “The Rauner proposal spends just a little bit more—just north of $37 billion. This one comes in at $36 billion. There’s not much in the way of differences in terms of spending; there is a big debate on whether the budget’s balanced.”
Rauner’s budget proposal back in February included a line that valued “Working together on ‘grand bargain’” at roughly $4.6 billion as a way to make up the difference between his proposed expenditures of $37.3 billion and anticipated revenues.
“That “grand bargain” you referred to?” Schraufnagel said. “That was a hope against hope for the state Senate to work with him to devise a series of law changes that would make up that deficit … That was his way of balancing the budget.”
He noted that Rauner’s predecessors did similar things by passing budgets which required additional legislation to bring them into balance.
During the past two fiscal years without a budget, services to many segments of Illinois have suffered, higher education has faced massive cutbacks, and the backlog of unpaid bills has grown to roughly $15 billion.
Opponents of tax increases have insisted that the legislature must cut spending to resolve the problem. Rauner himself said that, if lawmakers won’t agree to his agenda of a property tax freeze and term limits, then they should make $4 billion dollars in cuts rather than raise the income tax rate.
Schraufnagel doesn’t see any viable way that the state can meet the needs its citizens by cutting expenditures back to the level of current revenues.
“Almost certainly not. That’s not feasible,” he said, calling out higher education, kindergarten through high schools, and social services as unable to succeed at current funding levels. “The status quo just doesn’t hold up.”
The current Illinois individual income tax rate is 3.75 percent. The proposed increase is 1.2 percentage points – which is 32 percent of the current tax rate. That has opponents calling it “massive.” Schraufnagel doesn’t use that term, but he acknowledges there will be an effect.
“It’s 1.2 percent of your paycheck,” Schraufnagel notes, adding that the resulting rate from the proposed income tax hike will be basically what Illinoisans were paying before Rauner took office.
The temporary tax rate of 5 percent expired Dec. 31, 2016, and the General Assembly did not extend it. As a result, it dropped back to the current 3.75 percent.
If the tax hike is approved, an individual taxpayer will pay an additional $12 in taxes for every $1,000 in taxable income. That’s $600 for taxpayers with $50,000 annual taxable income, parceled out over a year’s paychecks. The increase would be retroactive to July 1 this year, so the impact would be half that amount for the current tax year.
“It’s probably a reasonable expectation given that only a couple of years ago people were paying that,” Schraufnagel said, “so it’s not going to be a burden that people haven’t seen before.”
While Schraufnagel agrees that Illinois is taxed more than many other states, he said, “States that have high tax rates tend to have good economies and a lot of wealth and create a lot of opportunities.”
He said that states like California, New York and Connecticut tend to do very well in attracting businesses, even though they have higher tax rates.
If the House votes to override Rauner’s veto and this budget becomes law, Schraufnagel expects positive results.
“It frees things up a bunch. The bills start to get paid again,” he said. “The state would be reinvigorated.”
Asked what would happen if the veto override fails, Schraufnagel talked about the mechanics of calling the measure for a vote. He noted that the House measure passed with 72 votes – which included 15 Republicans – but there were 10 Democratic defectors.
“Madigan didn’t call that vote last Sunday until he knew he had veto override kind of numbers,” Schraufnagel said.
He explained that all 25 House members who voted counter to their party’s proclivities had issues in their own districts that required the change in loyalty, “so all of them were trying to hedge their bets on the next election cycle.”
Schraufnagel pointed to the lack of a quorum in the House both Tuesday and Wednesday, and suggested that – unless the Speaker is assured of the vote count he needs – there may not be a vote today, either.
“If it fails to override, (Madigan)’s got 15 days to keep it open before the veto sticks and the bill’s dead,” he said.
Schraufnagel also offered his thoughts on some of the issues -- like term limits, redistricting and pension reform -- that have been sticking points in the budget impasse. Hear what he has to say in the audio file below: