BLOOMINGTON — Gov. Bruce Rauner understands what Normal is going through in raising property taxes to pay for pension costs, but he said he can't support a council member's suggested solution.

After voting for a 6.38 percent property tax increase Monday to cover employee pensions, Kevin McCarthy asked aggrieved residents to call their state lawmakers about a provision requiring municipalities to catch up on pension payments by 2040 — but Rauner thinks that law should stay.

"We've done what they're (town officials) saying in Illinois for decades, and that's created the ... $150 billion liability we're dealing with today that's crushing our budget," he told The Pantagraph.

The Republican pointed to restructuring pensions and reducing overlapping units of government as better solutions to what ails municipalities like Normal and McLean County, which are cutting employees and expenses in response to declining funding from the state and local sales and income tax losses.

"If we could shrink that bureaucracy, it would free up money to go to a municipality or a school district while also allowing property taxes to be saved. It's a win-win," Rauner said.

Rauner discussed that issue during an interview at CJ's Restaurant in Bloomington. The Winnetka businessman is running for re-election in 2018 against several Democrats and a Republican challenger.

He stopped in town to attend an event for state Sen. Bill Brady, R-Bloomington, the Senate minority leader. 

Of whether residents can expect another state budget impasse — Illinois went two years without a spending plan, wreaking havoc on local social service agencies — Rauner laid the blame on House Speaker Michael Madigan, a Chicago Democrat who passed budgets for decades under other governors.

The governor's office has said the budget still is $1 billion or more out of balance despite an income tax hike, though other officials have challenged that. They don't dispute that the state has nearly $17 billion in unpaid bills.

"All I said was, 'Let's have a balanced budget,'" Rauner said. "This is unsustainable."

Rauner also lauded congressional Republicans' tax reform plan despite the possibility of ending a federal tax deduction for state and local taxes paid by residents, which would especially hurt residents of high-tax states like Illinois. The plan is intended as a broad tax cut but could hurt the middle class.

"What I do believe would be good is to have lower rates and reduce the tax burden on working families and businesses, there's no question. Our taxes are too high at the federal level, and they're too high at the state level," he said.

Rauner affirmed his opposition to a progressive income tax, which would charge wealthier residents a higher percentage of their income. The federal government and 34 states have such systems, but Illinois has a flat tax.

"It would push more employers out of the state," he said. "All the changes I'm recommending either bring down growth in government spending, or it helps boost our economic competitiveness to grow more jobs and expand our tax base. Otherwise, we'll never have balanced budgets."

Follow Derek Beigh on Twitter: @pg_beigh

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