Illinois budget passes test run, but deadline will be missed

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Illinois could enter third fiscal year without budget deal

State faces financial crisis as Republican governor and Democratic lawmakers remain at odds; Jeff Flock reports from Chicago

A $36.5 billion foundation for rebuilding Illinois' crumbling finances passed a critical test on Friday, but a powerful legislative leader said no deal would be reached before a critical midnight deadline -- meaning Illinois will enter its third consecutive fiscal year without a budget.

The proposal would be fueled by a $5 billion income tax increase and $2.4 billion in spending reductions, according to Democrats who control the Legislature. The proposal was approved on a 90-25 vote in the House, but it was a test run.

The plan won't get a final vote before the fiscal year starts Saturday. Without a budget, the state enters dangerous territory: Some universities may not be able to offer federal financial aid, road construction and Powerball ticket sales could halt, and the state's credit rating could be downgraded to "junk."

House Speaker Michael Madigan said lawmakers would return to work Saturday. He also said he would send messages to the major credit agencies, which have promised to downgrade Illinois' creditworthiness without a deal by Saturday, seeking more time to finalize the pact.

The missed deadline marks another blow in the record-breaking budget stalemate, though it followed the strongest display of bipartisan cooperation in months.

Madigan, a Chicago Democrat, noted that much more work needs to be done, but said: "This is a good step forward, a step we can build upon."

The work includes finalizing negotiations on issues demanded by Republican Gov. Bruce Rauner, including a freeze of local property taxes and restricting costs in programs for injured workers and state-employee pensions. Madigan has his own demands, too.

The state's last annual budget expired two years ago Friday. In a fiscal morass -- the longest in any state since at least the Great Depression -- Illinois has rung up a $6.2 billion annual deficit and a $14.7 billion stack of past-due bills.

Without a deal this time, the United Way reports that 36 percent of all human services agencies in Illinois face closure by year's end, according to Rep. Greg Harris, the Chicago Democrat sponsoring the budget legislation.

Universities have already faced steep funding cuts and now face a loss of accreditation.

"There's really not much to say, given the gravity of the situation we're in. People in every corner of the state are watching what we do, to see if we get the job done," Harris said Friday. "We're staring at an abyss which faces us tomorrow morning when the clock strikes midnight."

But what has routinely been acidic, rancorous debate over how to meet the state's financial needs gave way to a measured tone of cooperation.

"I come to you today with great joy, not with regret or despair. We're going to save our state, and we're going to save it together," the House Republicans' floor leader, Rep. Steve Andersson of Geneva, said to thunderous applause.