He called for a bipartisan effort to energize the economy and usher in reforms, but in this heated political campaign season the governor's plans and stated accomplishments were met with a good deal of skepticism.
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Rauner talked about the positives of the past year, including education funding reform, cutting fees for small businesses, and criminal justice reforms. He then trotted out familiar coals for the coming legislative session: Lowering property taxes and term limits for politicians.
But his budget plans drew the biggest response.
Gov. Bruce Rauner delivers State of the State address
The governor's declaration that he would submit a balanced budget proposal in February drew thunderous applause from both sides of the aisle in the House chamber, because critics have accused Rauner of not doing so for the past two years.
"And I hope this year you guys will pass it instead of ignoring it," Rauner chided.
The governor called for property tax relief and a bipartisan effort to accomplish it. But then, without naming House Speaker Mike Madigan, took a shot at him by calling for a new law to prevent legislators from being property tax attorneys, which Madigan is.
Rauner has accused House Speaker Michael Madigan from profiting from high property taxes because his law firm represents owners appealing their assessments. Madigan says he follows the law and a strict personal code of conduct.
Rauner also called for a referendum to put term limits on the ballot.
"Eighty percent of the Illinois voters want term limits. The other 20 percent, it seems, are seated in this chamber and in elected Illinois courts," he said.
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Rauner's Republican primary opponent Jeanne Ives called his address short on specifics for how to turn Illinois around.
"I don't think anything will be any different this time around because many members still don't trust him and don't have a lot of respect for him, and he has not worked in a bipartisan way," Ives said.
And Rauner's Democratic opponents in the gubernatorial race were quick to weigh in.
"We saw a speech today from someone who has not been watching Illinois government for the last three years, someone who has not seen the failures of the Rauner administration for the last three years, someone totally disconnected from the reality that people in Illinois are experiencing," said candidate Daniel Biss.
The governor also took heat for his handling of the Legionnaire's crisis at a Quincy veterans home.
"I would just suggest that the governor didn't quite tell you what the state of the state is," said candidate JB Pritzker.
The governor cited several business success as he pushed for more economic growth, but was criticized for the state's current economy.
"He talk about how he wants to create a state where people have more, and can spend more and can build more, but the fact is since he's been in office we've had less, spent less and built less," said candidate Chris Kennedy.
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Rauner said he wants to roll back income taxes but did not identify how in his address.
The Republican has previously said he wants to reverse the income tax increase the Legislature approved last summer. It went from 3.75 percent to 4.95 percent. He said Wednesday that "we cannot tax and borrow our way into prosperity" and urged lawmakers to "curb spending" and boost job growth. But he gave no specifics.
Rauner will give his budget address in two weeks.
A new We Ask America poll done for Fulcrum Illinois showed Daniel Biss has now surged into second place. The poll shows JB Pritzker with nearly 30 percent, Biss with 17 percent, and Chris Kennedy in third with 11 percent. According to the poll, 38 percent of voters are still undecided.
Prtizker downplayed the impact of ads by Bruce Rauner featuring him talking to convicted former governor Rod Blagojevich about possible political appointments.
"Look, I believe with the heat of the last 48 days of the campaign that everybody seems to be shooting at the guy that they think is the front runner," Pritzker said.
Kennedy also downplayed the poll.
"There will be lots of polls between now and March 20, and of course the one on March 20 is the only one that matters," Kennedy said.
But then when asked if he would support Pritzker if he won the nomination and faced Rauner in the fall, Kennedy made a surprising statement.
"Do I think that ultimately he's a better candidate? Do I think it's better to have him in charge than Bruce Rauner? Yes," he said.
House Speaker Madigan released a statement saying, ""As he has done throughout his administration, Governor Rauner chooses to blame others for the challenges facing our state on his watch instead of being the leader he was elected to be. If the governor were as serious about addressing property taxes as he is about scoring cheap political points, he would have come to the table and worked with Democrats to support any of the multiple bills we have advanced to provide property tax relief for middle class families.
"For the good of our state, maybe it's better the governor continue sitting on the sidelines and pretend he is 'not in charge.' That way, serious leaders can continue working to move our state forward, while the governor can continue to ignore his utterly dismal record without accomplishments, and avoid the real discussion about the damage he has inflicted on our state. While he remains on the sidelines, those of us in the Legislature will continue working together in a bipartisan way to ensure our state moves forward."
Mayor Rahm Emanuel released a statement in response to Rauner's address saying, "While the governor is about to give his State of the State address calling for bipartisanship, the members of the state legislature just showed what bipartisanship actually looks like by coming together to override another of Bruce Rauner's vetoes. The governor's constant partisan actions speak louder than his empty words, and it's clear after three years that the governor only reaches across the aisle with contempt and finger pointing."
The Associated Press contributed to this report