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Too Much, Too Little, Too Late: Junk Status for Illinois Coming Up

Courtesy of Mish.

The House voted to override Rauner’s veto of a budget today following a brief  lockdown mode after white powder was thrown at Governor Bruce Rauner.

Emergency crews and a hazmat team at the Capitol determined the substance was not toxic.

Crain’s reports It’s official: Illinois has a budget. Your taxes are going up.

The action came on a largely party-line vote of 71-42, the bare number needed, with GOP lawmakers who broke from Rauner in passing the bill last week joining with all but a handful of Democrats to finalize the tax increase.

Since the Senate already had voted for an override, the action means that, effective July 1, the individual income tax will rise from 3.75 percent to 4.95 percent and the corporate rate from 5.25 percent to 7 percent.

Minutes after, the vote on the tax hike: the budget was approved 74-37 and the budget implementation bill 71-41.

Roll Call

A Roll Call highlights the action.

Republican Reps. Cavaletto, Davidsmeyer, Meier and Reis all switched from being “Yes” on 3rd Reading to being “No” on the override. So, they lost 5 Republicans (Rep. Pritchard was absent) and still approved the motion.

Democratic Reps. Halpin, Manley, Mayfield and Scherer switched from No to Yes. Scherer had said repeatedly that she was a “No” vote and is considered a target, so that vote is really interesting.

Junk Anyway

The Illinois Policy Institute reports Illinois Budget Proposal May Not Be Enough to Avoid Junk Rating.

The tax-hike, no-reform budget House Speaker Mike Madigan is pushing – and some Republicans have blessed – might not be enough to prevent a downgrade to junk, according to Moody’s Investors Service.

The rating agency warned in a press release July 5 that it was placing Illinois “under review” for a possible downgrade – even after acknowledging the impact of additional tax revenues.

Illinois is only one notch above junk status. If Moody’s decides to downgrade Illinois, Illinois will be the first state in the nation to ever fall to junk status.

The agency decided to put the state under review despite the fact that it expects lawmakers to override Gov. Bruce Rauner’s veto of the $4.8 billion tax hike, saying the review “incorporates our expectation that the legislature will implement revenue increases.”

Moody’s Reasoning – Key Points


Continue reading here…


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