Rauner’s veto statement explains why governor vetoed Illinois tax hikes, budget measure
In a statement to the General Assembly July 4, Rauner listed the reasons why he vetoed the budget.
After a two-year impasse, Illinois state lawmakers passed a budget.
Unfortunately, this new $36.5 billion budget will spend $5 billion that the state doesn’t have. To make up the difference, the Illinois General Assembly voted to impose $5 billion in tax hikes, including a permanent, 32 percent income tax increase.
Gov. Bruce Rauner promptly vetoed the tax hike and underlying spending plan, but the Senate voted immediately to override the governor’s veto. Now, the budget waits for a House override vote before it becomes law.
In a statement to the General Assembly July 4, Rauner listed the reasons why he vetoed the budget. The governor said the proposed budget “fails to address Illinois’ fiscal and economic crisis – and in fact, makes it worse in the long run,” adding that it does not provide tax relief, it does not include real term limits and it does not include any spending reductions.
The governor continued that even with the tax hike in place, the budget is not balanced and the revenue plan still falls $2 billion short of breaking even; the plan fails to address the $15 billion that the state already owes in unpaid bills; and it withholds K-12 funding until money from downstate school districts is shifted to bail out Chicago Public Schools.
Rauner cited House Speaker Mike Madigan’s permanent income tax hike as a core reason for vetoing the bills.
“This budget package includes no changes to create jobs and grow our economy,” Rauner said. “It will push more families and businesses out of our state.”
Even if the budget is enacted, Moody’ Investors Services is placing Illinois on review for a downgrade to junk status. Moody’s stated that, in addition to an outstanding debt of $32 billion, Illinois failed to enact a timely budget and remains divided on budget reform.
Rauner’s statement draws attention to Illinois’ longstanding trend of doing anything to avoid the hard work of meaningful reform. Illinois hasn’t balanced its budget since 2001 and the state is one step away from being rated junk, but state lawmakers chose to increase taxes without cutting back spending.
Illinois lawmakers have already tried using tax hikes as a solution – with less than favorable results.
In 2011, Illinois politicians enacted a record 67 percent income tax hike on individuals and a 46 percent corporate income tax hike. Springfield politicians promised the additional revenue would stabilize the pension crisis, pay down the state’s unpaid bills and help the economy.
Since then, Illinois has amassed over $15 billion in unpaid bills and owes over $250 billion in pension debt. These numbers show that Illinois politicians don’t need to spend more, but rather need to balance the budget and control the financial monster they created.