SPRINGFIELD, Ill. – Illinois officials missed the latest in a string of deadlines Wednesday in their battle over a new budget, and this time it threatens thousands of state employees and schools across Illinois.

Without a budget, the state comptroller won’t begin processing paychecks due to nearly 5,000 employees next week and $170 million in school aid payments scheduled to be mailed Friday.

The General Assembly began preparing to vote Thursday on a budget proposal, but the details were still being put in place and it wasn’t clear whether the plan would meet Gov. Rod Blagojevich’s conditions to be signed into law.

Lawmakers described a budget that would increase general spending by $2.1 billion, or 8.2 percent. Education would get an increase of nearly $600 million, or about 9 percent, which may be the largest in Illinois history.

Proposals to spend more on health care and construction projects will be considered separately, but officials weren’t sure when that would happen.

Even if the entire budget were wrapped up Thursday, it would be a record 69 days overdue thanks to bitter disagreements among state leaders, particularly Democrats.

“I guess it was just too much common sense to think the leaders could actually sit down and have a normal conversation about what we want the Democratic legacy to be from this legislative session,” said Rep. Joe Lyons, D-Chicago. “They blew it.”

Watching a key date come and go is nothing new for the officials groping for an agreement. They originally aimed to pass a budget by May 31. Then came the end of the fiscal year on June 30, followed by the expiration of a budget extension on July 31.

But those deadlines were largely technical, with little impact beyond ruining summer for some state officials and their families. Missing Wednesday’s deadline to begin writing checks could have real-world consequences, however.

Blagojevich urged Comptroller Daniel Hynes to begin processing the paychecks even without a budget in place, but Hynes said he does not have the legal authority to do that.

A Springfield credit union was offering interest-free loans if the checks do end up being delayed, and Blagojevich has directed the Illinois Finance Authority to offer no-cost loans to schools needing financial aid to open.

The Illinois House held brief appropriations hearings on the proposed budget Wednesday night. They produced few details and no copy of the actual legislation that was to be passed within 24 hours.

Rep. Gary Hannig, a key budget negotiator for House Democrats, said most new money in the plan would come from increasing the estimates of how much natural revenue growth Illinois will see in the coming year. There would be no tax increases, although about $125 million in tax breaks for businesses would end.

He acknowledged the budget would include money set aside for “member initiatives” _ projects that lawmakers can award to their districts without going through the normal appropriations process. Hannig would not provide a total amount.

Hannig rejected criticism that a state budget should not be passed on less than a day’s notice, with no copy of the legislation to study. He said this version is not much different from earlier proposals that have been discussed for months.

Democrats control the governor’s office and both legislative chambers, so they began the year with high hopes.

Blagojevich wanted to guarantee health insurance for everyone in the state. Senate President Emil Jones dreamed of finally overhauling the system of paying for education. House Speaker Michael Madigan talked about paying off state debt.

The optimism didn’t last long.

Legislators balked at the huge tax increase on businesses that Blagojevich proposed, as well as his idea of privatizing the state lottery. Without that money, there was no way to meet the goals of all three leaders except by raising income taxes, which Blagojevich flatly rejected.

Instead of trying to find some common ground, the three dug in and battled over who would call the shots. They traded insults and arranged political stunts, while Republicans sat back and enjoyed the show.

“It is not good to have one party in charge of everything,” concluded Sen. Christine Radogno, R-Lemont.

Republicans finally gained a role in the process when Democrats missed the May 31 deadline and suddenly needed more votes to pass a budget. But that did little to change the results.

Radogno said the deadlock reflects not just political differences but fundamental disputes over what’s best for the state.

“Part of the reason we’re not getting done here is because people are really fighting hard for their interests,” she said.