CHICAGO, May 28 (Reuters) - Illinois Republican Governor Bruce Rauner's so-called turnaround agenda hit another obstacle on Thursday when a key Senate committee dominated by Democrats rejected his proposal to freeze local property taxes.
The Senate Executive Committee voted 6 to 11, defeating a bill that would freeze property tax rates starting in 2016 for all local governments, including school districts and home-rule cities like Chicago, which is struggling with a structural budget deficit and a big jump in pension contributions.
The rejection followed recent votes by Democratic lawmakers against other items on Rauner's agenda, such as reforms to workers' compensation and lawsuits seeking compensation for injuries and the creation of local right-to-work zones, which would allow workers to opt out of union membership.
Democrats, who hold a majority in both legislative chambers - 39 to 20 in the Senate and 71 to 47 in the House - have begun passing their own fiscal 2016 budget bills ahead of the session's scheduled end on Sunday.
A standoff between the Democrats and the governor could push the legislative session into June or beyond to get a budget enacted for the fiscal year that begins July 1.
Illinois has the worst-funded public pensions and lowest credit ratings among the 50 states. Credit rating agencies have warned that the state could sink to the low-investment-grade-level of triple-B if it fails to produce a credible budget and if its shaky finances deteriorate further.
Rauner in February proposed a $32 billion general funds budget that relies on $6.6 billion of spending cuts with a third coming from questionable pension savings and no revenue increases. House Speaker Michael Madigan said on Monday that Democrats will offer a $36.3 billion spending plan that includes cuts and additional revenue, saying they would work with Rauner to find $3 billion in needed new revenue.
Republicans voted against the Democrats' spending bills, calling them irresponsible.
"If we pass these bills and send $36 billion of budgets to the governor, this is insanity. You're insane," House Republican Leader Jim Durkin said on Tuesday.
Rauner is not budging from his position that Illinois needs to reform many of its practices before he will entertain any revenue measures.
"Governor Rauner has made it clear that we cannot ask taxpayers to put more money into a broken system," his spokesman, Lance Trover, said in a statement on Wednesday.
(Reporting by Karen Pierog; Editing by Leslie Adler)