Illinois leaders inch closer to agreement on budget

SPRINGFIELD, Ill. -- Two weeks past their deadline, state officials reported progress Tuesday toward a budget deal that would keep Illinois government running and postpone many of the hard decisions about taxes and spending cuts.

Legislative leaders met twice with Gov. Pat Quinn and said they were moving closer to a possible deal. A vote could come today, the first day paychecks for state employees will be withheld because of budget gridlock.

Lawmakers described a budget plan that would depend on even more borrowing and financial maneuvering to paper over the state's record-breaking $11.6 billion deficit. Then officials could review the budget late this year or early next year to see whether more spending cuts or a tax increase would be needed.

"Is there a chance that we're going to be back here maybe in March or April or February, January? Possibly and probably," said House Minority Leader Tom Cross, R-Oswego. "But I think we need a little stability around here for the next six or seven months because it's been so chaotic."

The state's new budget year began July 1 without a budget in place, endangering paychecks for government employees and raising questions about the many contractors and community groups that get state money. Quinn, fighting for a tax increase, has warned that a budget proposal backed by legislators would require cuts in human service programs.

Paychecks were supposed to go out to at least 5,000 state employees today but will be delayed because the government doesn't have the authority to pay them.

The American Federation of State, County and Municipal Employees is asking a St. Clair County court to order the state to pay employees even without a budget. A hearing in the case was scheduled for this afternoon.

Unions representing state police officers said they are also prepared to sue today if a budget isn't approved.

Senate President John Cullerton said he hopes the legislature will pass a budget today. But he said the version they would be voting on still contains a major hole that should be filled later.

"To me, it's so obvious ... that we need an income tax increase," the Chicago Democrat said.

Quinn did not comment after his meetings with legislative leaders. A spokesman said they made progress and would meet again today.

A mix of plummeting tax revenue, rising costs and increased spending created the worst budget crisis in Illinois history. It left Illinois with a deficit that, for the past budget year and the current year combined, reached roughly $11.6 billion.

The Democratic governor argued the only way to close such a monstrous deficit was a combination of spending cuts and tax increases. Republicans and some Democrats balked at that, however, and the idea of a tax increase never got off the ground.

The legislature instead sent Quinn a budget that would have cut spending by billions of dollars, with much of that coming from grants to groups that provide local services such as child care, drug counseling and health care. Quinn vetoed that measure.

Now officials are searching for some way out of their deadlock.

Quinn has agreed to shelve the tax increase. He proposes passing a budget to keep government operating and allow time to study ways to cut Medicaid spending and other costs. Then officials could decide in November whether to cut spending, raise taxes or neither.

Legislative leaders seemed inclined to support some variation on that plan.

This version would include billions of dollars of financial gimmicks and one-time sources of revenue: borrowing about $3.5 billion to help pay annual pension costs, using about $1.1 billion worth of vaguely defined "inter-fund borrowing" and leaving about $3.2 billion in bills unpaid.

At least some of that money would be put into lump sums for Quinn to spend as he sees fit.

Senate Minority Leader Christine Radogno, R-Lemont, acknowledged the budget would not be balanced. But she defended it as the only way to offer some stability to the people and groups who depend on state government.

"We are at a drop-dead date where we have to adopt a budget. There are no good alternatives," Radogno said. "This is, I think, the best of a number of bad alternatives."