Illinois governor: Will not sign unbalanced state budget

By Karen Pierog CHICAGO (Reuters) - Illinois Governor Bruce Rauner said on Friday that he will reject a fiscal 2016 budget from the Democratic-controlled legislature if it is not balanced. While the Republican expressed optimism that Democrats were now willing to negotiate his so-called turnaround agenda, his office later lashed out at Democratic House Speaker Michael Madigan for declining to compromise. Democratic state lawmakers have been voting down key elements of the governor's agenda, including reforms to workers' compensation and a local property tax freeze. Democrats have also been passing their own spending plan for the fiscal year that begins July 1, while acknowledging the $36.3 billion general funds budget has a $3 billion revenue shortfall. [ID:nL1N0YJ1WH] "I cannot sign a fake budget, a phony budget, an out-of-balance budget," the governor told reporters in the state capital of Springfield. "The people of Illinois deserve better." Illinois has the worst-funded pensions and lowest credit ratings among the 50 states. Credit rating agencies have warned Illinois could sink into the low-investment grade level of triple-B if it fails to produce a credible budget. The state's general obligation bonds due in 10 years are trading at a yield 182 basis points over benchmark triple A-rated debt. That is up from a 151 basis-point spread at the start of May. Rauner, who met with legislative leaders earlier on Friday, said Democrats have until the end of the legislative session at midnight on Sunday to demonstrate their sincerity to compromise. Steve Brown, Madigan's spokesman, said the legislature's consensus on Rauner's reforms has been "thumbs down." Brown added the speaker will continue to work in a cooperative and professional manner with the governor and with Republican lawmakers to plug the revenue gap in the budget. Democratic Senate President John Cullerton "restated his commitment to work with the governor on reforms," according to Rikeesha Phelon, Cullerton's spokeswoman. She added even though the Senate rejected the reforms, the two sides can continue to work "on a turnaround agenda that works for middle-class families." Rauner repeatedly said he was willing to compromise and that he has backed away from some items on his turnaround agenda. He declined to discuss what he hoped to obtain from the Democrats, saying he will not negotiate through the media. The governor added he will not call lawmakers back for a special session this summer, but will be available to meet with them at any time or place. (Editing by Steve Orlofsky and Matthew Lewis)