CHICAGO -- Lawmakers in both Illinois and Wisconsin went into overtime budget deliberations yesterday.
Although Gov. Jim Edgar of Illinois and legislative leaders reached a tentative budget agreement Tuesday night, the legislature failed to act on the budget before fiscal 1993 ended on Wednesday.
On Wednesday night the House passed two components of the agreement, but as of late yesterday afternoon had not acted on any others. The Senate had not voted on any part of the plan.
One of the two components passed by the House would render permanent a temporary 10% income tax surcharge, with $258 million of the proceeds going to the state and $86 million to local governments. The other would provide an $84 million injection of state funds for Chicago' public Schools and $181 million for schools in the rest of the state.
Other parts of the tentative agreement call for increasing the state cigarette tax by 14 cents a pack and applying a 20% tax to other tobacco products to raise a total of $115 million for Medicaid.
In addition, the legislature would place on the November 1994 ballot an advisory referendum on capping property tax increases in Cook County at 5% or the rate of inflation, whichever is less, and requiring all new general obligation debt to be approved by voters.
The tentative pact would also authorize the Illinois State Toll Highway Authority to issue bonds to extend two highways at an estimated cost of $1.6 billion. Four temporary taxes that provide Chicago with $40 million would be made permanent.
Chicago would lose $23 million this fiscal year under the new distribution formula included in the income tax surcharge agreement.
The budget agreement does not include riverboat gambling for Chicago, which came up late in the legislative session. Mayor Richard Daley of Chicago unveiled draft legislation for a riverboat casino and entertainment complex last month. That legislation called for $350 million of revenue bonds to help acquire land for the project.
Because the session is in overtime, a three-fifths vote is required to pass the budget. A state budget official said the legislature is expected to complete voting on the $29.1 billion all-funds budget by tonight or tomorrow.
In Wisconsin, the state Senate passed a $30 billion operating budget for fiscal 1994-95 Wednesday night. David Patrick de Felice, a spokesman for Assembly Speaker Walter Kunicki, D-Milwaukee, said the Assembly was expected to vote on the budget late yesterday and hold conference meetings with the Senate on the budget next week.
The Senate changed Gov. Tommy Thompson's proposed local property tax rate freeze, which had raised concerns on the part of rating agencies. Thompson had called for keeping local governments' tax rates at their December 1992 level, a move that rating agencies said could reduce revenue flexibility and weaken the creditworthiness of some governments.
Richard Chandler, the state's budget director, said the Senate's plan places the freeze only on counties, while school districts would have a spending cap and cities would be given incentives to hold down spending. He said the cap on school districts would hold revenue collections per pupil to the inflation rate. Meanwhile, municipalities whose annual spending increases do not exceed the rate of inflation would be rewarded with more state aid under an Expenditure Restraint Program.
Mike Boerger, an aide to Senate Majority Leader Mike Ellis. R-Neenah, said the new plan was drafted by Senate Republicans, who felt it offered more property tax relief.
The Senate did not adopt Thompson's plan to dedicate all state sales tax revenues, beginning in fiscal 1995, to school funding, according to Chandler. However, a jump in state revenues since the governor introduced his proposed budget in February allowed the Senate to add $250 million of funding for schools over the biennium, bringing the total increase in school funding to $375 million.
The Senate also set aside $70 million in the budget as a litigation reserve for a pending lawsuit on state income tax refunds to federal retirees. Last month the Wisconsin Tax Appeals Commission ruled the state owes the retirees $1 00 million. Chandler said the case is now before the state court of appeals.
Chandler said the Senate's version of the budget is substantially similar to the governor's proposal and that the governor would support the plan. He said Wisconsin law allows the state to continue spending at fiscal 1993 levels until the new budget is approved.