governor signs FY 2015 budget, vows to cut more
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[July 01, 2014]
CHICAGO (Reuters) - Illinois
Governor Pat Quinn signed the state's $35.7 billion operating budget for
fiscal 2015 on Monday, vowing to continue to chisel away at spending
approved by the legislature.
The General Assembly's budget is peppered with one-time measures
after House Democrats in May could not muster enough votes to make a
temporary income tax hike permanent.
Higher personal and corporate income tax rates, which were passed in
2011 during one of the state's budget pinches, are set to partially
expire on Jan. 1, causing an estimated $2 billion revenue decline in
the fiscal year that begins on Tuesday. The new budget keeps most
spending at fiscal 2014 levels despite the revenue drop.
The Democratic governor, who pushed for making the tax rates
permanent, said he will do the budget cutting that lawmakers failed
“Reducing the budget and identifying additional efficiencies will
help minimize the impact of cuts in vital services and maintain our
hard-won fiscal gains," Quinn said in a statement. "While there's
more work to do, we must ensure the state lives within its means.”
The governor said he canceled $250 million for state capitol
renovations and directed state agencies to identify additional
efficiencies, including selling nearly half the state's aircraft.
Last week he announced plans to save $55 million by cutting the
amount of property leased by the Illinois government and also called
for a reduction in the amount of state-paid parking for workers.
The revenue decline will occur in the second half of fiscal 2015 as
the personal income tax rate falls to 3.75 percent from 5 percent
and the corporate rate drops to 5.25 percent from 7 percent.
Republican lawmakers have warned that Democrats who control the
House and Senate will try to make the higher tax rates permanent
following the November general election. Bruce Rauner, Quinn's
Republican opponent in the governor's race, said in a statement that
Quinn's "only goal is to permanently take more money out of every
hard-working Illinoisan’s paycheck – and this broken budget is the
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The budget is expected to add $2 billion to Illinois' backlog of
unpaid bills, while allowing the governor to borrow up to $650
million from a variety of dedicated state funds to boost general
fund cash flow. These kinds of one-time revenue measures have
contributed to past downgrades of Illinois' credit ratings, which
are at the lowest level among states.
This month, Moody's Investors Service said the budget poses the risk
the state could erode some of the progress it has made in reducing
its huge pile of unpaid bills.
The state's bill backlog currently totals $4.3 billion, according to
Quinn's budget office.
(Reporting by Karen Pierog; Editing by James Dalgleish)
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