Democrats override Illinois Gov's tax hike veto,$ 5 billion

Posted: Jul 7, 2017

Democratic lawmakers voted 71-42 to override Republican Gov. Bruce Rauner's veto of a $5 billion tax hike on Thursday. Illinois has been in a budgetary showdown to address a $6.2 billion deficit, as well as nearly $15 billion in unpaid bills and hundreds of billions of dollars in unfunded retirement benefits for state workers. Rauner had pushed lawmakers to close the deficit by reforming workers compensation and consolidating local governments, while also capping local property taxes. Democrats, who control the state Senate and House of Representatives, along with 16 Republican state representatives, rejected those measures and instead approved hiking income taxes from 3.75 percent to 4.95 percent and corporate taxes from 5.25 percent to 7 percent on Sunday night. Rauner vetoed the bill on Tuesday..... "This is not just a slap in the face to Illinois taxpayers. This is a 2-by-4 smacked across the foreheads of the people of Illinois," he said. "This tax hike will solve none of our problems. In fact, in the long run, it will make our problems worse, not better." The state's massive debts had spooked markets. Credit-ratings agencies had threatened to downgrade Illinois to junk status, a move that would drive up interest payments and make it that much harder for the state to borrow money. Moody's downgraded Illinois to Baa3, just a step above Junk, in June due to the "political impasse" over the state's budget and its $251 billion pension debt. However, the Democrats' solution failed to improve the state's standing. Moody's announced on July 5, the day after Rauner's veto, that it had place the state "under review for possible downgrade." "Despite the progress toward budget balance that the emerging fiscal plan embodies, the plan entails substantial implementation risk," Moody's said. "The plan appears to lack concrete measures that will materially improve Illinois' long-term capacity to address its unfunded pension liabilities.";