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In Budget Speech, Rauner Pushes Tax Cut and Pension Shift

Rich Saal
The State Journal-Register (pool)
Gov. Bruce Rauner shakes hands with Democrats Mike Madigan and John Cullerton during his budget address in Springfield on Wednesday, Feb. 14, 2018.

Gov. Bruce Rauner outlined his plans for the Illinois budget in a speech to lawmakers Wednesday afternoon.

Rauner said he wants to begin rolling back last year’s tax increase, which he has criticized since it passed over his veto last summer. At the time, he called it a “two-by-four smacked across the foreheads of the people of Illinois.”

In his speech to lawmakers Wednesday, Rauner toned down his rhetoric. But his message was the same:

“The people of Illinois are taxed out. A billion-dollar income tax cut should be our No. 1 objective by the end of this session,” Rauner said. 

"A billion-dollar income tax cut should be our No. 1 objective by the end of this session."

Notice, however, that he said "the end of this session." Rauner’s budget counts on the money raised by that tax increase. And his plan to roll it back is tied to cutting pension benefits for state workers, university employees, and public school teachers. Those cuts would surely be held up by a lawsuit, meaning any savings that would pay for a tax cut are years away.

Pension Cost Shift

Rauner said one way to keep control over pension costs is to have local school districts pick up part of the tab.

"Our budget proposal shifts costs closer to home, so people can question expenses and deal with them more directly. Now, they have no incentive to manage costs because the state picks them up no matter what they are," he said.

Critics say while the idea might save money at the state level, local property taxes could go up to offset the change. The idea has been raised previously but failed to gain any traction. Rauner proposed phasing in the costs over a four-year period.

The lawmakers who helped negotiate Illinois' new school funding reform law said they were surprised by the proposal.

State Sens. Jason Barickman, a Republican from Bloomington, and Andy Manar, a Democrat from Bunker Hill, both said they'd learned of the governor's plan only a few hours earlier. Manar, who sponsored the bill designed to send more state dollars to needy schools, said a pension cost-shift would have the opposite effect.

"This would literally rewrite the school funding reform law. And we haven't even seen a penny of that money hit a classroom in the state, and already the governor's saying let's rewrite the whole darn thing," Manar said.

Because Chicago Public Schools have traditionally paid their own pensions, the bill added normal pension costs into each district's financial needs. A cost shift would require recalculating funding targets for all 850 districts, and could drastically change the amounts they are expecting to receive.

Barickman said Democrats have embraced this idea in the past, and should do so again.

“There’s public policy that supports a cost shift, the notion that there’s an accountability placed on the local units of government," he said.

Democrats say they did support the idea, but not with the reductions in union rights Rauner says should be part of the plan.

Another Stalemate?

Rauner's budget address had Democratic House Majority Leader Barbara Flynn Currie of Chicago wondering whether Illinois may face another long budget stalemate.

Last year, Democrats and a smattering of Republicans passed a budget over Rauner’s objections after two years without one.

“We have a governor who’s been intransigent and if that continues to be the way of the world, then there will be a budget impasse. But I’m hopeful there will not be," Currie said.

State Rep. Dan Brady, R-Bloomington, called it a good speech that reflected the reality of revenue and spending pressures facing state government.

"Hopefully the Democrats can meet us halfway on some of those reforms," Brady said.

He said state schools like Illinois State University were offered a mixed bag Wednesday. The governor announced plans to add $100 million in capital funds to meet deferred maintenance needs at universities and community colleges. But the pension shift would cost those same schools more money.

"That's where we're going to have a very lengthy and contentious debate," Brady said.

State Sen. Bill Brady, R-Bloomington, agreed with Rauner's assessment that Illinois residents are overtaxed.

"Now, with this balanced budget proposal in hand, we can begin the bipartisan process of giving Illinois residents a budget that will help stimulate our economy, grow jobs, and continue providing record funding for education," said Brady.

You can watch Rauner's budget address:

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Brian Mackey formerly reported on state government and politics for NPR Illinois and a dozen other public radio stations across the state. Before that, he was A&E editor at The State Journal-Register and Statehouse bureau chief for the Chicago Daily Law Bulletin.
Sean has led the NPR Illinois news operations since the fall of 2009.
Ryan Denham is the digital content director for WGLT.
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