Illinois Governor Accused of Sabotaging Tax Bill

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By Michael J. Bologna

The bipartisan “grand bargain” package of tax and spending bills aimed at pulling Illinois out of a two-year budget crisis collapsed March 2 with Senate Democrats accusing Gov. Bruce Rauner (R) of manipulations derailing the legislative plan.

Senate President John Cullerton (D) had scheduled a series of votes on key features of the grand bargain, including plans to raise the personal and corporate income taxes, impose a new tax on sugar-sweetened beverages and freeze local property taxes. But Cullerton abruptly closed the legislative session and dropped the scheduled votes, saying Rauner had essentially forbidden Republican senators from supporting the measures.

Cullerton, speaking to reporters after the session, said he had spent a good portion of his day negotiating compromise language, particularly around the property tax freeze, with Minority Leader Christine Radogno (R). Late in the day, however, Radogno contacted Cullerton and confided she would be unable to supply any Republican votes during the scheduled session because Rauner wanted further modifications.

Cullerton portrayed Rauner’s intervention as an effort to manipulate a complicated bipartisan process that required compromises by both Democrats and Republicans. Cullerton said Rauner needs to decide if he wants a sustainable budget for the state or a continuing pattern of fiscal crisis. Illinois hasn’t had a traditional budget since June 30, 2015, and is struggling with a backlog of unpaid bills totaling more than $11 billion.

“The compromise is there. The governor has got to realize this is as good as it’s going to get,” Cullerton said. “Can we make some minor changes, of course we can. We’ve been doing that for a month with Senate Republicans. But he’s got to grow up and get this solved. He’s the governor.”

‘More Work Is Needed’

Catherine Kelly, a spokesperson for the Rauner administration, rejected assertions that the governor sought to derail the grand bargain process. Kelly said Rauner continues to support key features of the various bills, but further modifications are needed.

“We appreciate the hard work of the Senate in trying to pass a bipartisan agreement that can become law,” Kelly told Bloomberg BNA in an email. “Some progress has been made, but more work is needed to achieve a good deal for taxpayers. We encourage senators to keep working toward a good deal for taxpayers.”

For her part, Radogno said her caucus is “willing to compromise.”

“I have no question in my mind that we’re going to bring this thing in for a landing,” Radogno said in comments before the Senate.

Income, Beverage Tax

The key tax features of the grand bargain were folded into an amendment to S.B. 9. Among other things, the bill would raise the personal income tax rate to 4.99 percent from the current 3.75 percent rate. The bill would bump the corporate rate to 7 percent from 5.25 percent. The two increases were expected to raise almost $5 billion annually for the cash-starved state.

Additionally, the bill would impose a penny-per-ounce tax on sugar-sweetened beverages. Preliminary estimates show the tax would collect $560 million annually.

The bill also modifies the Illinois False Claims Act to bar whistle-blowers from filing suits targeting purported tax frauds. The issue has attracted national attention in recent years because a small group of Chicago attorneys has filed hundreds of lawsuits alleging minor violations of Illinois’s sales and use tax.

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

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