Illinois Tax Rate Soars 32% After Senate Overrides Governor Veto

Tyler Durden's picture

Two days ago when we reported that the Illinois House had voted 72-45 to pass a 32% income tax hike (and a $36 billion spending plan), in an last ditch scramble to provide the state with its first budget in three years (or else suffer the first ever US downgrade to "Junk"), we said that "ultimately, the fate of Illinois' credit rating is now in the hands of Rauner, and whether and how fast his imminent veto is overriden."

We got the answer on Independence Day afternoon, when just around noon, first the Senate voted to approve the House tax hike and spending bill, then shortly after, Gov. Rauner - just as he warned he would - vetoed both the income tax increase and the budget bill and budget implementation bill....

.... only to be himself overriden moments later by the Senate, as it took the drastic measure to end a record budget impasse.

The 36-18 vote in the Senate on the tax hike came after a very short debate, and two days after more than a dozen Republicans in the House broke ranks with Rauner to join Democrats to support the plan amid growing frustration.

Needless to say, former PE titan, Bruce Rauner disagreed, and in his veto message to lawmakers said that "the package of legislation fails to address Illinois' fiscal and economic crisis —and in fact, makes it worse in the long run. It does not balance the budget. It does not make nearly sufficient spending reductions, does not pay down our debt and holds schools hostage to force a Chicago bailout." Rauner also noted he did not get the economic agenda items he had made a requirement to sign a tax hike into law.

"This budget package does not provide property tax relief to struggling families and employers. It does not provide regulatory relief to businesses to create jobs and grow the economy. It does not include real term limits on state elected officials to fix our broken political system" said Rauner, listing the issues from what he once dubbed his "turnaround agenda."


Gov. Bruce Rauner holds a press conference

It does however stave off the day of reckoning and potentially Illinois junk status downgrade.

The voting came as Illinois entered its third year without a budget amid Wall Street's threat of a credit downgrade to junk status, potential layoffs of construction workers and with Illinois already booted from the Powerball and Mega Millions lottery games.

"We don't have any time left," said Sen. Toi Hutchinson, D-Olympia Fields. She laid out what is at stake without a resolution, including the state's credit rating being downgraded to junk status, road workers being laid off, and the dismantling of higher education and social safety net.

* * *

The tax hike and budget now head to the House, which also will have to vote to override Rauner for them to become law. But according to the Chicago Tribune, Democratic Speaker Michael Madigan said the House would not do so Tuesday, meaning the budget process will play out at least another day. The House is not scheduled to convene until 4:30 p.m., but attendance has been an issue as lawmakers had dispersed for the holiday. Still no surprises are expected:

"I think that the Senate vote is reflective of the vote in the House. I think it speaks to all the hard work that has been done by a bipartisan group in the legislature," Madigan told WICS-TV of Springfield after the vote. "My expectation is that the bills that the Senate just passed will become law and we will have taken a huge step toward correcting the financial imbalances of the state of Illinois."

Perhaps, although some have suggested that instead of hiking taxes, which will lead to a fresh exodus of taxpayers from both Chicago and Illinois (recall the Chicago population is already shrinking the most of any US city) what the budget should have done is slash spending. Of course, that is the last thing on the mind of legislators of one of America's biggest nanny states.

In fact, quite the opposite: the accompanying budget plan, which the Senate also quickly approved 39-14, would have the state spend a little more than $36 billion, about $4 billion more than it currently takes in from taxes. In other words, Illinois just "saved" itself from default but assuring it would end up with even more debt.

* * *

Going back to the vote, as the Tribune adds, the 36 votes in the Senate was the minimum needed both to pass and override a veto. There are 37 Democrats in the Senate, but two voted no. They are Sen. Julie Morrison of Deerfield, and Sen. Tom Cullerton of Villa Park. Both likely will face a tough re-election challenge. Sen. Bill Haine, D-Alton, who has been undergoing treatment for blood cancer since February, traveled to the Capitol to vote for the plan. The critical vote belonged to Republican Sen. Dale Righter of Mattoon, who noted the damage done to Eastern Illinois University in his district.

"Every dollar that we throw onto the backlog of bills is a dollar the next generation has to pay for even though we got to spend it," Righter said. "That's simply wrong, and that is the basis for which I support this."

* * *

So do today's last minute Senate fireworks mean no Illinois downgrade to junk is coming? It remains to be seen: the movement after years of dysfunction was enough to delay the state's credit rating from being cut to junk status by Wall Street ratings agencies Monday, though they warned that much rides on a final approval of the budget package.  Even then, S&P Global Ratings warned that long-term damage has already been done.

"Even with a budget, however, it's likely that Illinois' finances would remain strained and vulnerable to unanticipated economic stress," the agency said. "In addition to having accumulated record amounts of payables, the state's university system has been deprived of state funding since January 2017. If a budget is enacted, the degree to which it closes the state's structural deficit, provides a pathway for addressing the backlog of unpaid bills, and its impact on cash flows, will be important factors in our review of its effect on Illinois' credit quality."

Meanwhile, on Monday Fitch called the weekend developments “concrete progress,” noting that it appears the legislature may have enough votes to override Rauner’s planned veto of the tax hike. S&P called the actions a “meaningful step.” Yields on the state’s 10-year debt have soared to 4.8 percent, 2.8 percentage points more than those of benchmark obligations. That’s the highest yield of all 22 states that Bloomberg tracks.

It would be the ultimate insult to Illinois if despite the last minute scramble, S&P were to do to the insolvent state what it did to the USA in August 2011, when despite the pleas of Obama, Geithner and the entire administration, it went ahead and did the unthinkable, when it downgraded the US from its vaunted AAA rating. In any case, it's only a matter of time before Illinois slides not only to Junk, but to Default as well...

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drendebe10's picture

Tax and spend progressive liberal democraps. Fukemall

Silver Bug's picture

Illinois is just the first of many to face pending collapse. This is just the beginning.

 

http://www.goldsilverliberty.com/2017/07/welcome-to-third-world-illinois...

serotonindumptruck's picture

It's only the beginning for those bureaucracies who can no longer hide the graft and corruption.

How high must taxes be raised before the people realize that they are being victimized by those elected officials who have sworn to represent their interests?

This only ends with Revolution and/or Civil War.

Koba the Dread's picture

Revolution or civil war? Most likely it will end in catatonia.

NOTE TO THE HARD-OF-THINKING: Catatonia is not an island off the coast of California.

espirit's picture

 

Take names Rauner, document facts.

 

Illinois will fall hard. Write a book after the fact.

  

ramon_espino's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.jobproplan.com

agNau's picture

Good.
There's people in Illinois that need your money.
Send them a check.

MANvsMACHINE's picture

Illinois bonds will likely rally on the news. Great opportunity to short. They're no better off now. Just kicked the can.

Keyser's picture

That giant sucking sound you hear is all the people that actually work for a living, leaving Illinois in droves... The only people that will be left are the entitlement class that keep electing democrats like Luis Guttierez and Dick Durbin to office... Good luck with that... 

False_Profit's picture

Phuck these ignoramuses in Illinois, you are contributing to the downfall of our country with your refusal to CUT SPENDING!

productive citizens and companies are welcome to come to kansas...hell, you can even conceled/open carry here without a license!

secretargentman's picture

If you loan money to government you deserve to get stiffed. Don't be an enabler! 

GUS100CORRINA's picture

Illinois Tax Rate Soars 32% After Senate Overrides Governor Veto

My response: I can already hear the stampede of human feet out of Illinois and it will get louder by the day. 

You know what they call this situation? A DEATH SPIRAL

DanDaley's picture

Out here in Iowa I've seen way too many Illinois license plate over the last several months...and we now have a lot very unsavory types hanging out in the malls. Rats high and low deserting the sinking ship.

HungryPorkChop's picture

And everyone wonders why Bitcoin (with a limited supply of coins issued) is around $2,500 at time of this article.  Soon it will be at $4,000 to $5,000 as new plantation script is printed.  Long Live The Fed...

Xredsx's picture

If America was to fall, who will get the blame?

Got The Wrong No's picture

The set up is in play. You know the answer. 

Déjà view's picture

Certainly NOT Weiss Ratings...
WEISS RATINGS: UNITED STATES RECEIVES SOVEREIGN DEBT RATING OF C (FAIR)
https://www.weissinc.com/weiss-ratings-united-states-receives-sovereign-...

Hal n back's picture

Madigan just put the final nail in the coffin.

 

The jackass raised taxes by 5 billion. Now Illinois has been court ordered to pay 5 billion in past due Medicaid. Remember Obamacare pushed down Medicaid to the states. All states have this problem.

 

Consequently, Illinois is no better off than it was in Fiscal year ended 6/30/17-it was underfunding  pensions, not paying for social services, not funding schools properly had to defer lotto payments and of course not paying vendors,

 

Madigan is corrupt to say this is fixed. The state is in deeper trouble than before, if Moodys and S&P do not downgrade to junk, they are as culpable in this mess as Madican and State Legislators. The other house representives and senate members are either corrupt to pass this, inept or have no spine.

 

On the other hand, this act will ensure the state goes bankrupt-probably soon as there is no money to be spent. Since there is no bankruptcy law for states, they had better devise one cause its going to get crowded. The foolish vendors should do what other creditors have done in free enterprice. sue the State for their money. That will create the bankruptcy. The state of illinois has been mismanaged for decades.

Also remember all the teachers in Illinois always said the kids come first? BS-its is always about the teachers(and you good teachers out there are tarnished by the bad) The teachers 30 years ago went on strike every 3 years for bigger raises--in a corporation thats losing money, it was like hitting ones head against the wall--public workers? no way.

Madigan screwed the current teachers and students with this current budget, he screwed the welfare system in IL. For him, the union workers come first. Screw everone else, not jsut the taxpayers but the people who need social service the schools and IL can now forget getitng good quality vendors to do anything.

And the union public workers  pensions? They will also run out of assets in the not too distant future.

 

Too bad all the smart union bosses and teachers did not work out a good deal that actually worked. Not to mention the spiking and retiring early, etc.

 

 

GunnerySgtHartman's picture

Republican surrender monkeys!

Gardentoolnumber5's picture

That aren't really Republicans. Unless it's election time then they just make Republican noises until the first vote after reelection. It's a game they play and it seems to work almost every time.

Cabreado's picture

On Independence Day too... priceless.

These lowly little legislator employees of the People don't even know history.

vato poco's picture

too fuckin' funny. "the real problem here on this sinking ship is we just haven't been re-arranging the deck furniture fast enough! well, this'll fix THAT!"

prediction: IL ends up putting Natl Guard troops on their state lines to keep people from fleeing before CA does

His name was Seth Rich

Her name was Monica Peterson

#PizzaGate

#WhatsontheLaptops

#WhyUNoIndictWeiner

#WhyUNoIndictPodesta

#WhyNoPodestaLeaks

#WhoRTheAwanBrothers

#DraintheSwamp

#BuildThatFuckinWall

#TheyAllHaveToGoBack

Badsamm's picture

I'm shocked they were working?

Gardentoolnumber5's picture

"Hard Work" according to Speaker Madigan Yep, raising them taxes sure brings on a thirst.

jerry_theking_lawler's picture

I 'agree' slightly with the one republican who voted for it....in the fact that you must PAY FOR IT NOW. He should have went a step further and demanded a balance budget bill so that if they want it, they must tax someone for it. No more borrowing to finance their largess....this would change alot of things in that State, and quick. Their rates would go up 200% at least just to try and get it even. Then you would see it turn Red quick....or population drop by 50%.

zzzz88's picture

tax payer is always the victim

CoCosAB's picture

fuck DUMB tax payers!

espirit's picture

Suppose they raise a tax but there was nobody was left to pay it?

Wha? Wait!

MonkeyKnutz's picture

YEAH, Because living under the threat of a gun and/or imprisonment = FREEEDOM!!!!!!!!!!!! Happy 4th, Bitches!!!!!!!!!

newworldorder's picture

Illinois can play its fiddle as long as the US FED Orchestra chooses to play on. And it will play on,  until the last real dollar reaches their pocket.

Theta_Burn's picture

And people say Jersey's fucked up...

CoCosAB's picture

What are tax slaves good for?

 

PAYING TAXES... of course!

 

DO NOT FORGET!

KEEP VOTING! IT WILL CHANGE THE SYSTEM!

KEEP WORKING!

KEEP CONSUMING!

KEEP OBEYING!

Dr.MantisToboggan's picture

I live in cook county currently and I'm moving to Lewisville Texas in September. I can't wait to be out of this God damn state 

WFO's picture

Texas property taxes are so high you feel like a renter. Texas is not that great - and I'm 7th generation Texan. Too many people moved here and fucked it up.

Shinebama's picture

Too many people from Illinois you mean. The panty waist liberals move to TX and spread their socialist ideas like a boiled egg and beer fart spreads in a car with the windows rolled up.

WFO's picture

Yep. I have friends here in Texas from Chicago - very nice people, but total statist.

WFO's picture

We're already fucked - 45% of all Texas students started as non-English speakers, if that tells you anything. And then all the new comers that want it like it was back home.

Keyser's picture

There are more transplants from Mexifornia in Texas than from any other state and they are all statists... I lived in Texas a long, long time before leaving the country for good and used to welcome these folks on a regular basis, while telling them to leave their politics in Mexifornia... The look on their faces was priceless... 

Déjà view's picture

Tejas = Sirens...movers beware!

-Bring an Español dictionary...
-2nd highest per capita combined state/local debt...
-CAB Bonds galore...financial weapons of mass destruction when due...CAN WAS KICKED DOWN ROAD 20-30 YEARS...ignorant something for nothing electorate...constantly approving opaque cost bond issues...
-81 muni pensions with MUCHO problems...some not reporting to state comptrollers office...
-$70m-$ H.S. football stadiums et al slam business with heavy property taxes...
-51 FIFTY-ONE TOLL ROADS...
-Illegals receive instate tuition...Tejas first state to introduce back in 2001...

ENJOYING HOUSTON STREET SIGN NAMES IN CHINESE/VIETNAMESE...

Shì Señor!

vato poco's picture

"Back home in Chicago/California/New York/the Midwest we did things this way ... '

Pro Tip: Texans don't give a fuck how y'all "did things" back in the liberal statist shitholes you ran away from like little bitches.

Blankone's picture

The people of the Tejas portion have NO idea of the powder keg that has been built and is set to self actualize. Even the rural people think they have such a colorful mix of culture. But now the mexicans have so populated the region the long held undercurrent that - the mexicans were never treated right and the land was taken (and often it was) from rightful ownership of mexicans - just needs a few sparks. The mexicans will exert their will and take the dominant position. And there will be forms of retribution felt by the whites.

Even the rural whites of Tejas go out of their way to show Texas Hospitality to the influx of Muslims and their mosques.

MonkeyKnutz's picture

I do believe they made a song about that....and Yes, I lived in Tejas for 4 years.  This is my opinion with your police state.

https://youtu.be/QxP442T-aZ0

yogibear's picture

Know of many liberals that moved to Texas and F'd it up.

Just like the Californians  moved to Colorado and messed it up.