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UPDATE 1-Illinois' budget battle moves into overtime

(Recasts with budget talks moving into June, adds statement from House speaker, comments from school and business officials)

CHICAGO, May 31 (Reuters) - Illinois will not have a fiscal 2018 budget by the end of its spring legislative session at midnight on Wednesday after House Speaker Michael Madigan announced earlier in the day that work on a spending plan will continue in June.

The move pushes budget talks into an overtime session in which a tougher vote of a three-fifths majority will be needed for approval. The move also risks potential downgrades of Illinois' already-low credit ratings.

The nation's fifth-largest state is nearing the June 30 end of its unprecedented second-straight fiscal year without a full budget due to an impasse between Republican Governor Bruce Rauner and Democrats who control the legislature. As a result, Illinois' pile of unpaid bills, a barometer of the state's structural deficit, has topped $14 billion. Major rating agencies, which have pushed Illinois down the credit scale six times to a level two steps above junk since Rauner took office in January 2015, have signaled more downgrades are possible.

Madigan blasted Rauner for continuing the impasse, saying the governor has refused to meet with House leaders.

The governors reckless strategy of holding the budget hostage to create leverage for his corporate agenda that pads the profits of large corporations and insurance companies has for the third year left Illinois without a budget at the end of the May legislative session," Madigan said in a statement.

The Senate last week passed a $37.3 billion fiscal 2018 budget plan that includes income tax hikes, a sales tax on services, and spending cuts last week without Republican votes.

Earlier on Wednesday, officials from several public school districts pleaded in the state Capitol for a full state budget, an improved school funding system, and $1.1 billion in state payments that have been delayed due to Illinois' cash crunch.

"It's time to end this nonsense that has robbed our children ... of a high-quality education," said Galesburg Community Unit School District Superintendent Ralph Grimm.

State business groups that support cost-saving changes to laws governing compensation for injured workers and other measures sought by Rauner also expressed frustration.

"Illinois businesses are really sick and tired of what they're seeing going on," said Greg Baise, president and CEO of the Illinois Manufacturers' Association.

(Editing by Matthew Lewis)