"Even if we got a deal (in the Senate), it's not like that's going to be an easy position to take if you're the governor because you're basically hooking arms and jumping with presumably three caucuses with no assurance that Madigan would ever be for that deal. That's a pretty difficult political calculation," said the source close to the governor.
In looking through the lens of 2018, some Democrats have questioned whether Rauner wanted to enter his re-election campaign having signed a major income-tax hike and other tax increases.
For their part, those in Rauner's camp said they didn't believe approving what would have been the largest tax increase in state history would have been an automatic disqualifier with voters.
The Rauner aide summed up what the re-election messaging would have been: "We did a big tax increase, but you also got a permanent tax relief. For job creators, we did some stuff in tax reform to give you a little bit of room on your taxes but we also did changes in workers' comp … On the budget, we've shown fiscal restraint. We've done a tax increase, but we've also done significant spending cuts."
Raoul and the Madigan confidant both acknowledged that approving a massive tax increase in and of itself would not be politically fatal.
"Does a guy going into re-election want to go in with a $24 billion debt (or a tax increase)?" Raoul asked. "Which is worse? He's already said on the record that he's willing to sign a tax increase … Now you have some business organizations, like the Civic Federation, saying, 'Hey, the tax level that even we're contemplating in the "grand bargain" is not enough.' So, you've got that cover."
At the same time, because Democrats control the legislature and a Republican sits in the governor's chair, there could be the potential for shared blame, muting the political fallout over a tax hike.
"There's a lot of political calculation going on about who would wear the jacket," said the person close to Madigan.
By not raising taxes, Rauner potentially could try to sell voters on a theme that he prevented Madigan and the Chicago Democratic machine from raising taxes to bail out the state's and city's troubled finances.
During an appearance in the western suburbs last week, Rauner alluded to just such a theme when asked how Illinois voters should assess his tenure.
"We've blocked the General Assembly majority, Madigan's Democrats, from even more spending, more deficits. We've blocked a lot of really bad things from happening," Rauner told reporters.
More than just tax increases are part of the political calculus, however. There's also extensive budget cuts — something both sides say are integral to restoring Illinois' financial stability.
Senate Democrats rejected the Rauner administration's call to give the governor extensive budget-cutting powers and mocked his budget director, who told them no list of cuts existed that the governor would unilaterally make. But Democrats also are loath to make cuts.
That leaves both sides unwilling to take the political blame for spending cuts that could prove unpopular with voters.
Republicans and Democrats also privately wonder about the impact of the national political environment in next year's races and how Trump's controversial presidency will affect Rauner and other GOP candidates. It is a significant issue for both sides since Democrat Hillary Clinton defeated Trump in all but one of the traditionally Republican-leaning collar counties that can be key in statewide races.
There's also the question of who will become the eventual Democratic nominee for governor. The party looks to be split along progressive versus more establishment lines, with progressive Chicago Ald. Ameya Pawar and state Sen. Daniel Biss of Evanston on one side and wealthy establishment figures such as Chris Kennedy and J.B. Pritzker on the other.
Nominating a wealthy, potentially self-funding candidate would be helpful to Democratic interests looking to use money from union allies to hold their legislative majorities. But going that route also could take away Democratic class-based arguments that Rauner's wealth makes him out of touch to the concerns of average voters. Rauner, a former private equity specialist, already has put $50 million of his own money into his re-election bid, and aides promise that there will be more to come.
Even before the 2018 election, there are factors that could force at least some kind of budget deal, albeit temporary or limited in scope.
Democratic Attorney General Lisa Madigan has indicated she will appeal a lower-court decision rejecting her argument that state workers should not be getting paychecks without a properly passed legislative appropriation. If she wins, it could force the state into a major shutdown because it is unlikely workers would show up without knowing when or if they would be paid.
There's also a court appeal by the American Federation of State, County and Municipal Employees Council 31, the state's largest public employees union, of the Rauner administration's declaration that it was at an "impasse" with the union in talks on a new contract.
AFSCME won a stay of the state Labor Relations Board "impasse" ruling, in effect preventing the Rauner administration from imposing its final contract offer. The union also has received authorization to call a strike in a vote of its members.
If a dramatic work stoppage doesn't occur to force a budget compromise, there is the accelerating collapse of the state's social service network and reluctance of private vendors to do business with state government, which faces an estimated $14.7 billion backlog of bills on June 30.
In addition, Tom Cross, the former Illinois House Republican leader who now chairs the Illinois Board of Higher Education, contends some public universities — already cutting programs and staff — are at a tipping point due to the lack of state funds.
"I think we're now at a point where if we don't see a budget soon — not down the road but now — we're going to start seeing, I think, some very bad examples of accreditation issues, maybe not honoring your bond covenants, and continue to see a (student) out-migration problem," Cross said.
Noting the importance of salaries and business purchases from public universities to regional economies, Cross said, "We need to quit talking about winners and losers. We need to realize we're impacting people's lives on a daily basis."
Winners and losers will emerge from next year's election, however. If Rauner wins a second term and Democrats take advantage of the legislative district boundaries they drew and keep control of the General Assembly, it's questionable what dynamics will change between the governor and the House speaker to get a budget passed.
By that point, Illinois government finances may be beyond a point of no return.
Major bond rating agencies repeatedly have downgraded the state's creditworthiness for borrowing with warnings that without a budget, they could put Illinois into junk-bond status.
"Illinois' fiscal crisis is, in our view, a man-made byproduct of policy ultimatums placed upon the state's budget process," Standard & Poor's analyst Gabe Petek said in a report last month. Petek said the state's "distressed fiscal condition and dysfunctional budget politics now threaten to erode the state's long-term economic growth prospects."
The agency currently rates Illinois two steps above junk and has indicated that even if the Senate compromise had passed, the state's creditworthiness would not be given an upgrade for at least two years.
Already, the market has valued Illinois bonds at or near junk-level status. In November, Illinois sold $480 million of bonds at a 2-percentage-point penalty over an established benchmark for states with strong creditworthiness.
Rauner's budget office projects that without action, the current budget year's $14.7 billion backlog of bills will grow to at least $27.7 billion by July 2019. That's the equivalent of what a 7.3-percentage-point hike in the personal income tax rate hike would generate, with a corresponding increase in the corporate rate.
Last month while speaking to the City Club of Chicago, Cullerton, the Senate president, issued a dire warning if the budget stalemate continues through 2018.
"We're almost two years behind in paying our bills now. The next governor will be paying businesses four years late," the Chicago Democrat said.
"By then, we'll have been downgraded to junk-bond status and no one will lend us money. The new governor will have that hung around his or her neck," Cullerton said. "I don't want to even speculate what the tax rate would need to be to try to dig out of that hole."