Budget impasse has Illinois facing junk bond status

SPRINGFIELD, IL - The major Wall Street credit rating agencies say buying Illinois bonds could soon be like buying junk.

If a budget is not passed by the end of this week, Illinois is in danger of becoming the first state in the nation's history with a junk bond status. That increases the cost of borrowing, only making it more difficult to dig out of a hole.

It seems each day this week, there are warnings of a new consequence of the impasse. Road construction projects could be suspended on Saturday if no agreement is reached, and schools are worried about if they will be able to stay open all year come fall.

Solving this crisis boils down to getting a spending plan and paying for it. The spending plans are out there, including the plan released by House Democrats on Tuesday.

There is some willingness from both Republican Gov. Bruce Rauner and the legislature to raise income taxes, and charge sales taxes on services previously not taxed to raise revenue.

However, the House spent the day Wednesday debating some of the non-budgetary changes Rauner and the Republicans have asked for, like freezes on local property taxes and changes to the state's workers compensation system and pension system.

A Metro East lawmaker said the moving goal posts on those issues are making it difficult to get a deal done.

"The governor always seems to want more," said Assistant House Majority Leader Jay Hoffman, D-Swansea.

"These are non-budgetary items, they're important. But we should be dealing with the budget today, the budget tomorrow the budget Friday and if we don't get it done by Friday we shouldn't be leaving here until we're done."

The negotiations have been especially frustrating for the Illinois Policy Institute, a group that has done research on Illinois' budget woes and has proposed solutions.

"We need spending reform, we need a balanced budget with no tax increases and we need regulatory reform," said John Bergquist, Chief Financial Officer of the Illinois Policy Institute. "We need the legislators to wake up and realize that we are at a crisis point here with the potential downgrade to junk."

Both sides are making non-budget demands, with House Speaker Michael Madigan wanting changes to the state's school funding formula as part of a deal.