Rauner says his agenda will make Illinois more competitive

SPRINGFIELD, Ill. (AP) - Gov. Bruce Rauner laid out a first-year agenda Wednesday he said will help Illinois better compete with its neighbors, largely by stripping power from labor unions, shrinking the size of government and making the state more attractive to companies looking to create jobs.

The Winnetka Republican acknowledged the proposals in his first State of the State address were ambitious, but said they are needed for Illinois to keep up with other states and repair a multibillion-dollar budget hole.

"It's now or never for Illinois," Rauner told members of the General Assembly at the state Capitol. "It's time to act."

Among his top priorities is a jobs and economic growth package Rauner said must reduce the cost of workers' compensation and unemployment insurance and would increase Illinois' $8.25-per-hour minimum wage to $10 over seven years. That's a smaller increase and slower phase-in than a proposal approved by a Democratic-controlled Senate committee earlier Wednesday.

Rauner also said he wants to freeze property taxes for two years, give local government employees the right to decide whether to join a union and begin looking for ways to eliminate or consolidate some of Illinois' more than 7,000 units of government.

The roughly 45-minute speech provided the most detailed look to date at Rauner's priorities, but major questions remain about how his initiatives will be paid for given the rollback of Illinois' temporary income tax that took effect Jan. 1. Some agencies and programs already are running out of money this year, and the state faces an approximately $6 billion drop in revenue in the fiscal year that begins July 1.

Powerful House Speaker Michael Madigan and some other Democrats said they want to see more detailed proposals from Rauner, and will work with him to try to find common ground.

"Where the rubber hits the road is we need to see what his plans are to address the state's financial challenges," said Democratic state Sen. Dan Kotowski of Park Ridge. "A very specific plan."

Rauner is scheduled to propose his budget plan on Feb. 18. While he didn't tip his hand completely during Wednesday's address, he said his agenda includes income tax rates that are "low" and "competitive with other states." He also said he wants to "modernize" the sales tax by imposing a tax on some services.

Many of Rauner's proposals are likely to meet opposition from the Democrats who control both chambers of the Illinois Legislature, as well as some Republicans who have strong relationships with labor unions.

In addition to creating so-called "right to work zones" where paying union dues would be voluntary, Rauner said he wants to let local voters decide whether their government unions should be able to collectively bargain over wages and benefits. He also said government unions should be prohibited from making campaign contributions, a practice the first-time elected official and former businessman described as "political dealing."

Labor leaders blasted the proposals and said they would unite against them. They also accused Rauner of putting his corporate friends and fellow multimillionaires above working people.

"Hurting unions is not the solution," said Dan Montgomery, president of the Illinois Federation of Teachers.

Rauner also pitched some ideas legislators could be more willing to embrace, including spending more money on K-12 and early childhood education, hiring more prison guards and investing in programs that keep non-violent offenders out of prison.

"I wouldn't characterize anything as a non-starter," Madigan said. "I agree with the governor that the state of Illinois needs a lot of work, a lot of attention, that there is a serious problem with fiscal issues in the state."

Democratic Senate President John Cullerton was less charitable, saying Rauner's speech was an opportunity "squandered with campaign rhetoric."

But business leaders praised Rauner's plans for workers' compensation reform and other proposals, such as investment in career and technical education.

"Job creators see a glimmer of hope because Gov. Rauner recognizes that Illinois can no longer afford to kick the can down the road," said Greg Baise, president and CEO of the Illinois Manufacturers' Association.

Rauner renewed his failed campaign-season push for term limits, saying voters should decide in the 2016 election whether lawmakers should be limited to eight years in office. And he said he wants to lift a statewide cap on the number of charter schools, which typically are not unionized.

Associated Press reporter Nick Swedberg and Political Writer John O'Connor contributed.