The future of Illinois online gambling remains cloudy, as the Democrat-controlled legislature and Republican governor continue a budget standoff. The Illinois Senate overrode Gov. Bruce Rauner’s veto of a $36 billion budget bill on Tuesday.
If the state cannot pass a budget deal, it would mark the third year in a row that Illinois has gone without a state budget. On Sunday, 15 Republicans voted with the Democrat majority on the budget. With Gov. Rauner’s veto, the Illinois House of Representatives must vote to override that veto.
Rescheduled Online Gambling Hearing
The package the Senate passed on Tuesday has a $2 billion deficit. The legislature plans a July 27 hearing to discuss the advantages and disadvantages of online gambling in Illinois.
John Pappas of the Poker Players Alliance said that online gambling would raise $300 million over its first 3 years, so iGaming might be one of a series of measures which might close the $2 billion gap. Illinois has major issues and the PPA appears to have been overlooked at times in the negotiations.
Chicago Tribune: Thursday Veto Override Possible
It is unknown when the Illinois House members intend to have another vote. On Tuesday, only 54 members appeared, which was not enough to form a quorum. Democratic House Speaker Michael Madigan and Republican Minority Leader Jim Durkin were among the 64 members who did not appear.
The legislature reconvenes on Wednesday, but no indication has been given that a vote is imminent. The Chicago Tribune reported that a handful of Democrats expected an override vote on Thursday, but a spokesman for Speaker Madigan said nothing is “firm”.
Risk of a “Junk” Credit Rating
Illinois faces serious financial consequences if a budget is not passed. Over the past two years, court-ordered spending has kept the essential state services running. Court-ordered financing is imperfect and a number of services have suffered, including the public school system and Illinois’ state-funded universities.
Two major credit rating agencies, Fitch Ratings and S&P Global Ratings, said they would move Illinois’ credit rating to “junk” if proper budgeting was not signed into law soon. Throughout June, there was speculation that Fitch and S&P Global would downgrade the state’s credit on July 1, when the next fiscal year began. The agencies gave the state a grace period, though it is uncertain how long it might last.
If Illinois’ credit rating was downgraded, it would make it unlikely that the state could borrow the $6 billion it wants to borrow to gain a lower interest rate. The current bill calls for a $5 billion tax increase to start to pay down the nearly $15 billion debt the state owes. That is why Bruce Rauner vetoed the current bill, because he is taking a hardline stance against raising taxes.
15 Republicans Voted with Democrats
When the 15 Republicans sided with Democrats over the budget on Sunday, many members shed tears. Those GOP members said they believed it was immoral to continue to spend money their grandchildren would have to pay back, while delaying repayment was going to have a detrimental effect on the state’s residents in the near future.
Sen. Toi Hutchinson of Olympia Fields, who sponsored the Senate bill, summed up the mood of the Democrats and their allies on the vote in saying, “We are faced today with the fierce urgency of ‘now.’ We don’t have any more time. And too late is not good enough.”‘
The property tax situation in Illinois is one reason Bruce Rauner was elected, because homeowners believe their property taxes are outrageous. At the same time, some middle class residents believe the state’s flat tax is one reason for the state’s financial troubles. Those residents’ representatives have called for a graduated tax in the coming years.
2018 Reelection Issues
With Illinois facing some of the most serious financial troubles of any state in the recent past, Republicans have said they would target Democrats (and fellow Republicans) who vote for a massive tax increase in the next election cycle. Bruce Rauner is said to be the Republican incumbant governor in the most trouble in the United States, because it has been an unpopular move to refuse to sign a budget bill for three years. Neither side is sure which political calculation is right, so the stakes are incredibly high at the moment.
Noting that the bill leaves the state’s budget still $2 billion short, Governor Bruce Rauner said after his veto, “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.”
What Bruce Rauner’s Obstruction Means for Online Gambling
The governor’s obstructionism is a major obstacle for online gambling. Any gambling bill is going to be controversial, because as certain number of lawmakers view tax revenues from such activities as a “sin tax”. The margin of error in crafting legislation is thin, especially if powerful land-based casino interests lobby against a bill. Having the governor opposed to any sort of dealmaking means the margin of error is smaller.
If the House and Senate leaders have to cobble together enough votes to override a veto, that is going to take all the political capital they have. Whether those same leaders will have the political capital — or political will — to add on new revenue sources later is questionable. At the moment, passing a budget and avoiding a credit crisis is at the top of everyone’s mind.
