Springfield, IL – It’s now been over a week since the General Assembly’s May 31 adjournment date and with only a few weeks left until the new fiscal year begins, Republican lawmakers and the Governor remain motivated to reach some sort of budget deal before July 1.

The need for a fiscal plan was further underscored June 9 when Moody’s Investors Service and Standard & Poor’s both downgraded Illinois’ credit rating, citing the political gridlock that has led to the state’s year-long budget gap. That same day, Comptroller Leslie Munger spoke out, stressing the need to pass a budget to address those services and programs that have gone unfunded for the last year, and for lawmakers to come together on a bipartisan spending plan to ensure critical services remain funded.

Members of legislative budget working groups have been working rigorously to create at minimum a fully-funded, short-term “stopgap” measure to fund K-12 schools, universities and social services, and keep state operations going for the next six months. Unfortunately, the majority Democrat leaders have indicated they are unwilling to discuss a full budget, accompanied by structural reforms, until after the November election.

However, lawmakers from both parties have expressed concerns over passage of K-12 education funding to ensure schools can open on time in the fall. Republican lawmakers stressed schools shouldn’t be held hostage to budget talks—or until Democrats can advance a funding package that directs hundreds of millions of additional dollars to Chicago Public Schools. In response, Senate and House GOP legislators have joined the Governor in pushing for legislation they have sponsored (SB 3434/HB 6583) that would fully fund K-12 education so students can head back to school on time this fall.

Short-term budget deal status

When it became clear the spring legislative session would conclude without a balanced budget deal for the next fiscal year, Senate and House Republican Leaders joined the Governor in urging their Democrat counterparts to move forward with a fully-funded, short-term budget to keep state operations going and fund schools. Though Democrat leaders refused to negotiate a stopgap measure prior to the May 31 adjournment, rank-and-file Republicans and Democrats have continued working together within a legislative working group to try and settle on a short-term budget plan.

Republican legislators are trying to remain optimistic that a deal can be agreed upon by the end of the month and before the new fiscal year begins on July 1. A short-term budget becomes even more critical in light of recent comments from Senate Republican Leader Christine Radogno, who said this week that it is unlikely there will be any movement on a full budget prior to the November elections. Radogno said she doesn’t expect the Democrats to agree to reform items or revenue increases that their respective constituencies might not like before heading to the polls in November.

School funding: the driving force behind the stopgap plan

With no state budget in place, public schools won’t receive any state funding unless lawmakers work out a deal. Republican lawmakers and the Governor have stressed that ensuring schools can open in the fall is the most pressing issue currently facing the state, and have introduced several measures (SB 3434/HB 6583) that would fully fund K-12 education for the next school year.

The proposals would also “hold harmless” Illinois’ schools, meaning schools would receive the same level of funding they did for the last school year. The measures would also end the practice of “proration,” or the deliberate underfunding of the General State Aid that schools should receive, that has taken place over the last seven years. Republican legislators have urged their Democrat counterparts to support these measures, to guarantee schools aren’t held hostage due to the ongoing budget impasse.

Moody’s Investors Service, S & P lower Illinois’ credit rating

As if more reasons are needed to end the budget impasse, Moody’s Investors Service and Standard & Poor’s on June 9 further downgraded Illinois’ credit bond rating, Fitch Ratings placed the state on negative watch. The bond ratings agencies all pointed to the political gridlock that has led to the ongoing budget impasse and lack of action to address the state’s significantly underfunded pension system.

Bonds are a tool the state uses to borrow money. The lower Illinois’ credit rating, the higher the interest rate the state will pay on a loan. Moody’s projected that the state’s bill backlog will surpass prior peak levels of about $10 billion in the coming months unless a budget deal is reached. Moody’s also cautioned that another downgrade could be imminent, and noted the state has a negative outlook, even with the downgrade.

Also on June 9, Comptroller Leslie Munger spoke out, stressing that the “hardship caused by the state’s ongoing budget impasse will grow significantly if Illinois enters a new fiscal year on July without further action in Springfield.” Though much of the state’s expenses are being funded through court orders, consent decrees and ongoing appropriations, many other important state services and programs rely on action by the General Assembly and the Governor.

Munger stressed the need to end the budget impasse to allow schools to open, ensure vendors are paid, and to keep state government operations running. Without new legislation, Munger said $23 billion in existing spending for schools, 9-1-1 call centers, domestic violence shelters, federally-funded social and human services and higher education will stop next month.

Munger said the best thing Springfield can do is come together on a bipartisan spending plan.