With the current budget set to expire on June 30th, Democratic lawmakers, led by House Speaker Mike Madigan, and Illinois Governor Bruce Rauner have only one week to come to an agreement on a spending plan for Fiscal Year 2016. Beginning July 1st, the State of Illinois will not have legal authority to pay many of its obligations, potentially causing the first government shut down since 1991. Both Madigan and Rauner must act sooner rather than later to come to a compromise or else face potentially devastating consequences for the people they are supposed to represent.
Illinois Comptroller Leslie Munger has detailed what would happen in the event of a shutdown including state workers not receiving their paychecks beginning on July 15th, delays in payments to vendors that contract with the state, cessation of Medicaid payments, and interruptions in payments to non-profits and small businesses. Each of these could undermine the economy by affecting both businesses and consumers ability to spend and manage their own budgets. But the most serious damage would occur if no budget deal was reached by August 10th, when schools are scheduled to receive state money for the upcoming year.
If that happens, as many as 100 school districts could fail to open on time this August. The impacts of such a drastic failure of public policy makers would include harming the education of children and a devastating economic blow to parents as they struggle to find child care or take time off work to watch their children.
The failure to come to an agreement so far is attributable to disagreements between Rauner and legislative leaders Mike Madigan and John Cullerton over the state’s fiscal policy. Rauner has previously proposed closing the projected $6 billion dollar shortfall through spending reductions alone. Madigan countered with a budget that contained modest savings but still included $4 billion more in spending than the state expects to receive in tax revenue. Democrats have proposed closing the $4 billion hole with a tax increase. Rauner has indicated he would consider new taxes to close at least some of the gap, but only if Democrats are willing to agree to some structural reforms to solve the State’s problems long term.
Both sides have taken actions recently that hurt rather than help negotiations to end the impasse. Mike Madigan has made comparisons between Rauner and disgraced former-Governor Rod Blagojevich, an inflammatory and hyperbolic statement. Madigan also appeared to walk away from serious negotiations months ago, opting instead to hold a series of public hearings intended to embarrass Governor Rauner while scheduling votes on a number of sham bills that Rauner has dubbed “phony reform.” Rauner, for his part, has taken to airing commercials attacking Madigan in an effort to go over his head directly to the public. The commercial could potentially undermine negotiations and make Madigan more resistant to change.
Rauner was elected to improve the state’s long-term fiscal situation by growing its economy, creating jobs, and ending waste and corruption. His reform package addresses many of the problems the State faces and clearly promotes his mandate. Still, Democrats control super-majorities in both the House and the Senate. Rauner may have to compromise on his agenda in order to get anything done, meaning more than just taking items off the table as he already has. The details of his plans for workers comp reform, property tax relief, and good government election reform will need to be negotiated with Democrats as well.
Governor Rauner has made improving the State’s business climate one of his key priorities. But a government shutdown would undermine the very stability and predictability that businesses rely on. Mike Madigan certainly deserves blame, perhaps most of it given that he and his political allies put Illinois in this mess. But Rauner may have to accept incremental reform rather than no reform or else face the very real consequences of failing to reach a budget deal. Madigan, for his part, must show that he’s serious about working with the Governor to solve the state’s long-term problems, not just hiking taxes on citizens who can scarcely afford it.