Rauner quickly vetoes income tax hike, lawmakers will try to override – Chicago Tribune

Tom MarkLast Update : Tuesday 4 July 2017 - 8:46 PM
Rauner quickly vetoes income tax hike, lawmakers will try to override – Chicago Tribune

Republican Gov. Bruce Rauner quickly vetoed an income tax increase on Tuesday, setting up lawmakers for an attempt to override him and end a record budget impasse.

The governor’s veto came a couple hours after the Illinois Senate voted to approve a 32 percent increase in the income tax rate with no votes to spare. Rauner announced the move on Twitter.

The flurry of action unfolded on Independence Day as the state entered its third year without a budget amid Wall Street’s threat of a credit downgrade to junk status, potential layoffs of construction workers and with Illinois already booted from the Powerball and Mega Millions lottery games.

The 36-18 vote in the Senate on the tax hike came after a very short debate, and two days after more than a dozen Republicans in the House broke ranks with Rauner to join Democrats to support the plan amid growing frustration.

“We don’t have any time left,” said Sen. Toi Hutchinson, D-Olympia Fields. She laid out what is at stake without a resolution, including the state’s credit rating being downgraded to junk status, road workers being laid off, and the dismantling of higher education and social safety net.

Legislators in the Senate and House now will have to cast another vote to override Rauner’s vetoes if the plan is to become law.

The Senate is likely to hold its vote on an override on Tuesday afternoon. But Democratic Speaker Michael Madigan said the House would not do so Tuesday, meaning the budget process will play out at least another day. The House is not scheduled to convene until 4:30 p.m., but attendance has been an issue as lawmakers had dispersed for the holiday.

Madigan was on the Senate floor during the tax hike vote.

“I think that the Senate vote is reflective of the vote in the House. I think it speaks to all the hard work that has been done by a bipartisan group in the legislature,” Madigan told WICS-TV of Springfield after the vote. “My expectation is that the bills that the Senate just passed will become law and we will have taken a huge step toward correcting the financial imbalances of the state of Illinois.”

The 36 votes in the Senate is the minimum needed both to pass and override a veto. There are 37 Democrats in the Senate, but two voted no. They are Sen. Julie Morrison of Deerfield, and Sen. Tom Cullerton of Villa Park. Both likely will face a tough re-election challenge. Sen. Bill Haine, D-Alton, who has been undergoing treatment for blood cancer since February, traveled to the Capitol to vote for the plan.

The measure won the support of one Republican, Sen. Dale Righter of Mattoon, who noted the damage done to Eastern Illinois University in his district.

“Every dollar that we throw onto the backlog of bills is a dollar the next generation has to pay for even though we got to spend it,” Righter said. “That’s simply wrong, and that is the basis for which I support this.”

Righter dismissed questions about whether he would face retribution for his vote from Rauner in the form of a primary challenger, saying he informed the governor’s office and Republican leadership of his decision.

“I enjoy as much as anyone the sometimes caricature the media likes to paint of the governor and this angry, vengeful guy,” Righter said. “I’ve spoken with the governor’s office, I’ve spoken with my leader, Bill Brady, and both were very respectful, they understood very well that I had to represent my district.”

Still, most Senate Republicans did not support the plan, as they have shown great deference to Rauner throughout budget negotiations during the spring.

For months, then-Senate Republican leader Christine Radogno of Lemont had worked to cut a deal with Senate President John Cullerton, but those efforts proved unsuccessful after Rauner became involved and made a series of demands that Democrats rejected. Chief among those was a refusal to sign on to a permanent income tax increase unless lawmakers also put in place a permanent property tax freeze, which Democrats said was politically popular but could wreak havoc on the budgets of local schools and governments that rely on those dollars.

Radogno stepped down with Saturday’s start of the new budget year. Her leadership post now belongs to Sen. Bill Brady of Bloomington, who acted as a go-between for Rauner’s office during those talks. Brady called for lawmakers to put off the vote Tuesday to continue working on changes pushed by the governor, including an overhaul of the workers’ compensation system.

Brady said the plan as-is was “incomplete.”

Under the tax measure, the personal income tax rate would increase from the current 3.75 percent to 4.95 percent, which would generate roughly $4.3 billion. An increase in the corporate income tax rate from 5.25 percent to 7 percent would bring in an additional $460 million. The surplus revenue could be used to cover the cost of borrowing to pay down unpaid bills, Democrats said.

The legislation also would reinstate the research and development tax credit, which would expire in 2022, and increase the earned income tax credit for low-income families. It also would end several corporate tax breaks, including those for companies that operate on the continental shelves or shift production out of state.

An accompanying budget plan, which the Senate also quickly approved 39-14, would have the state spend a little more than $36 billion, about $4 billion more than it currently takes in from taxes.

The movement after years of dysfunction was enough to delay the state’s credit rating from being cut to junk status by Wall Street ratings agencies Monday, though they warned that much rides on a final approval of the budget package.

Even then, S&P Global Ratings warned that long-term damage has already been done.

“Even with a budget, however, it’s likely that Illinois’ finances would remain strained and vulnerable to unanticipated economic stress,” the agency said. “In addition to having accumulated record amounts of payables, the state’s university system has been deprived of state funding since January 2017. If a budget is enacted, the degree to which it closes the state’s structural deficit, provides a pathway for addressing the backlog of unpaid bills, and its impact on cash flows, will be important factors in our review of its effect on Illinois’ credit quality.”

mcgarcia@chicagotribune.com

kgeiger@chicagotribune.com

Source: world

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