Wednesday, June 03, 2015

Illinois governor warns of possible cash crisis, restructuring

54 minutes ago

Republican Bruce Rauner smiles after winning the midterm elections in Chicago, Illinois, November 4, …

CHICAGO (Reuters) - Illinois Governor Bruce Rauner warned of a potential cash crisis on Wednesday as he braced his cabinet members for turbulent times ahead if the state does not have a balanced budget for the upcoming fiscal year.

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"We'll be asking each one of you to review in detail your operations, your departments, and get ready for the real possibility we are facing a cash crisis and a major, major restructuring of the government," the Republican governor said at a meeting in the state capital of Springfield.

Rauner spoke to his cabinet a day after announcing initial steps to deal with a nearly $4 billion hole in the $36.3 billion general funds budget passed by Democratic lawmakers for the fiscal year that starts July 1.

Democrats, who control the House and Senate, opted for a mix of spending cuts and yet-to-be identified new revenue. The governor insists he will not discuss new revenue until lawmakers address Illinois' structural problems through his so-called turnaround agenda, which includes term limits, changes to workers' compensation laws and a local property tax freeze.

"Let's be clear, reforms are at the core of the budget," Rauner said Wednesday.

House Speaker Michael Madigan, a Chicago Democrat, announced earlier that his chamber on Thursday will take up changes to laws governing compensation for workers' job-related injuries.

Rauner called Madigan's proposal "phony reform" based on a review of the legislation by his team. Still, he said he was cautiously optimistic compromises can be reached.

In the meantime, the governor said the state will go into serious contingency planning.

"We've got to prepare to run the government as best we can with the resources we have," he said.

Illinois' shaky finances, including a $105 billion unfunded pension liability, have left it with the lowest credit ratings among the 50 states.

Rauner said he hoped to press lawmakers to take up pension reforms in the coming weeks after the Illinois Supreme Court last month tossed out a 2013 law that cut state worker retirement benefits.

The legislature's spring session was scheduled to end on Sunday, but members were called back into what could be a lengthy overtime session with the House meeting on Thursday and the Senate on June 9.

Senate Democrats on Tuesday said they will push a package of bills to counter Rauner's agenda.

(Reporting By Karen Pierog; Editing by Tom Brown)


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