CHICAGO Fri Feb 20, 2015 6:25pm EST
CHICAGO Feb 20 (Reuters) - A deal to plug a $1.6 billion hole in Illinois' current budget is not imminent, the president of the state Senate said on Friday, contradicting assertions this week from the governor and House Speaker.
Senate President John Cullerton told Reuters the fiscal year 2016 budget unveiled by Governor Bruce Rauner on Wednesday complicates negotiations over the budget gap in fiscal 2015, which ends June 30. An impasse could potentially threaten cutoff of operating funds for child care, prisons and other state institutions, he added.
The Republican governor's $32 billion general budget for fiscal 2016 beginning July 1, aims to chop $6.6 billion from healthcare, local government revenues, mass transit and other areas. It raises no new revenue and controversial pension changes account for $2.2 billion of the savings.
"Because it's slashing programs and no revenue, I think that's going to make it difficult for us to reach an agreement" on the 2015 budget gap, said Cullerton, a Chicago Democrat.
In his budget address Wednesday, Rauner said a resolution was "literally days away." Madigan, also a Chicago Democrat, said after the speech he expected a deal "in a matter of days."
A Rauner spokeswoman said the governor continues to negotiate with legislative leaders and a Madigan spokesman said there is no agreement at this time.
But the Senate leader said the current budget problem needed to be solved before the fiscal year ends.
As for Rauner's first full-year budget, Cullerton said it contains "illusory" savings and pension changes that are "clearly not constitutional." Proposed cuts to Medicaid could raise costs by sending people to hospital emergency rooms, he added.
"If we passed this budget I think the rating agencies would downgrade us because it's not real," Cullerton said.
Illinois' credit ratings at A3 and A-minus at Standard and Poor's and Fitch Ratings are the lowest among the 50 states and have negative outlooks tipping toward triple-B - a low investment-grade rating level rarely assigned to U.S. states.
A structural budget deficit, a $105 billion unfunded pension liability and revenue loss from the partial rollback of temporary income tax rates are key factors.
Pension funding problems also plague Illinois' biggest city. Chicago's Mayor Rahm Emanuel has not disclosed how he plans to meet a $550 million state-mandated hike in payments to the city's police and fire pension systems.
Cullerton said any reduction in Chicago pension payments would need to be tied to statewide pension savings.
"Politically I don't think you want to just kick the can down the road for those people," he said. (Reporting by Karen Pierog and David Greising, editing by G Crosse)
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