Illinois facing partial government shutdown amid fiscal crisis

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A look at Chicago's financial crisis over schools

Public schools are facing a billion-dollar budget deficit

It’s not quite Greece, but Illinois is grappling with a frightening fiscal crisis of its own.

The state is facing at least a partial shutdown after lawmakers failed to pass a budget by a Tuesday-at-midnight deadline. While Illinois has long dealt with budget crises, the fact that power is split in the capital between the two parties is contributing to the current stand-off.

On Wednesday, a temporary budget also was voted down, meaning a partial shutdown was expected.

“The financial situation in Illinois has been dire for a number of years,” said Crain’s Chicago Business reporter Tom Corfman. “What brings it to a head is the election of Governor Bruce Rauner, a Republican with a strong agenda to change the state. At the same time, he faces opposition from the Democratic legislature and their constituents.”

The newly elected Republican governor and Democrats have been at a stalemate for weeks over the 2016 budget.

The Land of Lincoln has the nation’s largest state-level deficit, worst-funded pension system, and lowest credit rating.

Rauner has said, though, he won’t agree to the tax increases Democrats want unless they approve measures to make the state friendlier to business.

Caught in the middle of the stand-off are more than 65,000 state employees who aren’t all sure if they’ll get paid during a partial government shutdown.

The financial outlook isn’t much better in Chicago, where the nation’s third-largest school district announced Tuesday night it was cutting 1,400 jobs it can’t afford.

The cash-strapped Chicago Public Schools is facing a $1.1 billion budget deficit for 2016. On Tuesday, the school district emptied its checking account and took out a loan to make a state-mandated $634 million contribution to the city’s teachers’ retirement fund that was due by the end of the day.

Interim CPS CEO Jesse Ruiz blamed Illinois state lawmakers for failing to address the district’s financial crisis.

“As we have said, CPS could not make the payment and keep cuts away from the classroom,” Ruiz said in a statement. "As an immediate consequence of driving the district further into debt and our need to address the existing structural deficit -- which is also driven by decades of pension neglect -- CPS will make $200 million in cuts.”

Making the school district’s situation even more precarious are the heated and ongoing contract negotiations with the Chicago Teachers Union.

CTU’s current contract expired Tuesday night, and the union is threatening large protests and strikes if an agreement isn’t reached before the new school year begins in September.