Illinois Public Media News
Democrats in the Illinois Legislature on Wednesday approved a 66 percent income-tax increase in a desperate and politically risky effort to end the state's crippling budget crisis.
The increase now goes to Democratic Gov. Pat Quinn, who supports the plan to temporarily raise the personal tax rate to 5 percent, a two-thirds increase from the current 3 percent rate. Corporate taxes also would climb as part of the effort to close a budget hole that could hit $15 billion this year.
The higher taxes will generate about $6.8 billion a year, Quinn's office said - a major increase by any measure. In percentage terms, 66 percent might be the biggest increase any state has adopted while grappling with recent economic woes.
It will be coupled with strict 2 percent limits on spending growth. If officials violate those limits, the tax increase will automatically be canceled. The plan's supporters warned that rising pension and health care costs probably will eat up all the spending allowed by the caps, forcing cuts in other areas of government.
Other pieces of the budget plan failed.
Lawmakers rejected a $1-a-pack increase in cigarette taxes, which would have provided money for schools. They also blocked a plan to borrow $8.7 billion to pay off the state's overdue bills, which means long-suffering businesses and social-service agencies won't get their money anytime soon.
House Speaker Michael Madigan, sounding weary, said Republicans should have supported some parts of the plan instead of voting against everything.
"They're on the sidelines. They don't want to get on the field of play," the Chicago Democrat said. "I'm happy that the day has ended."
But Republicans noted they were not included in negotiations. They also fundamentally reject the idea of raising taxes after years of spending growth.
"We're saying to the people of Illinois, 'For eight years we've overspent, now we're going to make it your problem,'" said Rep. Roger Eddy. "We're making up for our mistakes on your back."
The increase means an Illinois resident who now owes $1,000 in state income taxes will pay $1,666 at the new rate. After four years, the rate drops to 4 percent and that same taxpayer will then owe $1,333.
Republicans predict the tax eventually will be made permanent.
"It's a cruel hoax to play on citizens to say this is temporary," said House Minority Leader Tom Cross, R-Oswego.
Democrats bristled at the idea that they are to blame for the state's financial problems, although they've controlled the governor's office and both legislative chambers since 2003.
They said some parts of the problem began under Republican governors and that Republicans backed some of the budgets that increased spending. They argued the national recession sent state revenues into a nosedive and that Democrats already have cut spending by billions of dollars.
"This mess is a mess that is the responsibility of all of us as Republicans and Democrats, of several different governors and part of the mess isn't even anybody's fault," said House Majority Leader Barbara Flynn Currie, D-Chicago.
The new tax money will balance the state's annual budget and let officials begin chipping away at the backlog of unpaid bills. Borrowing money, and then repaying it with a portion of the tax increase, would have allowed those bills to be paid immediately, aiding organizations that provide services for the state but go months without being reimbursed.
The delay and the spending limits are "very troubling" to groups pushing for the state to come up with money to pay its bills, said Sean Noble, policy director for Voices for Illinois Children, a member of the statewide Responsible Budget Coalition. Still, he called the tax increase "an enormous step" toward putting Illinois on sound financial footing.
The proposal passed the House on Tuesday night by a vote of 60-57, the bare minimum. No Republicans backed the measure there or in the Senate, where the measure passed 30-29.
Legislative leaders were eager to pass the plan before a new General Assembly was sworn in Wednesday, taking a slice out of the Democratic majority and removing lame-duck lawmakers who might be willing to support the tax before leaving office.
The governor has refused to discuss the tax proposal publicly, although his aides say he supports it. During his election campaign, Quinn promised to veto any tax plan that was higher than his proposal for a 1-point increase.
Early Wednesday, Quinn's office called the approved measure "strong action" that will strengthen the budget and actually help the state economy.
Republicans accused Democrats of doing irreparable harm to Illinois families and businesses. Business leaders decried the proposal as a job-killer.
"Based on this particular legislation the only businesses that will benefit are the moving companies that will be helping many of my members move out of this particular state," said Gregory Baise, head of the Illinois Manufacturers' Association.
"This is the nuclear bomb of jobs bills," said Sen. Dan Duffy, R-Lake Barrington.
Democrats countered that even with the increase, Illinois' tax rate will be lower than in many neighboring states - Iowa's top rate is 8.98 percent, Wisconsin's is 7.75 percent. They also maintain that without more money, state government may not be able to pay employees by the end of the year. Major government services might have to be halted, they warn, and groups waiting for state payments will go under.
"The wolf is at the door, ladies and gentleman," said Rep. Greg Harris, D-Chicago.
Spending limits were added to the plan to win the support of some suburban Democrats. Republicans said the limits don't do enough to clamp down.
The limits allow next year's spending to increase considerably so the state can make its required contribution to government retirement systems, pay overdue bills and cover other costs that had been shoved aside. After that, however, spending could not grow more than 2 percent annually for the next three years or else the tax increase would be reversed.
"We're really trying to handcuff ourselves and the governor in our spending," said Illinois Senate President John Cullerton, a Chicago Democrat.
A major increase in state income taxes has squeaked through the Illinois House as lawmakers search for a way to solve a historic budget crisis.
The tax would set the personal tax rate at 5 percent, up from 3 percent now. That would be a 67 percent increase. Corporate taxes would climb, too.
Gov. Pat Quinn's office says the tax increase would generate about $6.8 billion a year.
The increase passed 60-57. It now goes to the state Senate, which could still vote Tuesday night.
The Illinois House has rejected a proposal to raise cigarette taxes by $1 a pack.
The measure was one part of a larger tax plan that would generate about $7 billion a year to help close Illinois' massive budget deficit. The cigarette portion was supposed to produce about $375 million.
The cigarette proposal got only 51 of the 60 votes needed to pass Tuesday, but it could be brought back for another vote later.
Adding a dollar would more than double the tax rate for cigarettes.
Many lawmakers said that would hurt convenience stores and gas stations that sell cigarettes. They said the impact would be particularly harsh in border areas where neighboring states have lower taxes.
Illinois' new Treasurer is challenging all state officeholders to make their mark amid a massive budget deficit.
Longtime legislator Dan Rutherford was among the six officeholders sworn in Monday at the Prairie Capitol Convention Center. Rutherford reflected on coming to an inauguration as a young boy, when his grandfather was vice chairman of the Livingston County Democrats. The former Senator and House member from Pontiac said he will invest Illinois' money in the most secure way possible with solid business practices. But Rutherford said he will also base his work on prior experience.
"I intend to use this statewide stage and not be an obstructionist with my friends in the legislature in the executive branch of government," he said. "But I not going to be shy about articulating what I believe is necessary to help the economic standing of this great state of Illinois."
Rutherford served in the Illinois House from 1993 to 2002, and in the Senate from 2003 until resigning his seat Sunday night.
The proposal that could come up for a vote Tuesday would have a slightly lower income tax hike of 67 percent, compared to 75 percent that was announced last week.
The corporate rate would also see less of an increase. Much of the tax hike would be temporary as the state tries to dig itself out of a massive budget deficit. Cigarette taxes, property tax relief and spending caps are also part of the discussion.
Democratic leaders want to beat a Wednesday deadline. That's when a new General Assembly is sworn in with fewer Democrats, meaning passage of a tax hike would likely be more difficult.
Officials with the Champaign-Urbana Public Health District (CUPHD) are scrambling to find homes for a dozen displaced Rantoul residents who left the Cherry Orchard apartments last week after reports of poor living conditions.
Even though most of the Cherry Orchard tenants have left the apartment complex, CUPHD administrator Julie Pryde said one family continues to live there, but will move out once they have a permanent place to live.
"They have heat and water now, so they are safe in that regard," Pryde said.
The rest of the tenants have temporarily moved into hotel rooms. The CUPHD is trying to secure residential leases for those individuals with area landlords. Jennifer Valade, the social services director with the Salvation Army of Champaign County, said her agency's waiting for the public health district to help set up the lease agreements, so that the Salvation Army can work with people who need help with rent.
"It's obvious that they're going to need agencies to help them out, and unfortunately they were put in a situation that they didn't deserve," Valade said.
Problems with Cherry Orchard apartments stemmed from a Sept. 2007 review by health inspectors who discovered a broken septic system leaking sewage into nearby farmland. Since then, tenants have complained about inadequate heating, mold, and power outages.
Pryde said CUPHD has hit a snag in securing a lease for each individual. She said she is close to finding one family a permanent home, but still struggling to find homes for everyone else.
The Cherry Orchard apartments have traditionally housed many migrant workers, who live in Rantoul for part of the year while working for a large agricultural company, like Pioneer, Monsanto, or Syngenta. Some of them may not have a strong credit history, which can make it difficult to get a residential lease agreement worked out.
"The issue is some of these folks don't have a very good rental history, if any," said Andy Kulczycki, executive director of the Community Service Center of Northern Champaign County. "A lot of landlords screen their potential tenants."
Cherry Orchard's landlords, Bernard Ramos and his father, Eduardo, are schedule to appear before a judge during a Jan. 24 bench trial for failing to move their tenants and fix their sewer and septic systems as they originally promised.
Jason Barickman says the message is clear: "I just don't know how you look the voters in the face unless you substantially decrease the spending,"
Barickman was sworn in Monday morning as a State Representative to Illinois' 105th House District. He took the oath of office at the Livingston County Courthouse from Circuit Judge Jennifer Bauknecht with his his wife, Kristin, by his side. Barickman will be sworn in again Wednesday in Springfield for full two-year term. He replaces Shane Cultra, who was appointed Sunday to the State Senate.
Barickman said he is ready to get his feet wet right away, and vote against Democrats' proposed income tax increase of nearly 75-percent.
"Our government in Springfield has continued to spend too much money, and failed to address any of those serious reforms that they talked about," he said. "There's rumors of maybe some reforms to worker's compensation, but it appears to be nothing more than window dressing. We still have a pension system that's dramatically underfunded, and continuing to obligate the state to huge sums of money for the next 10, 20, 50 years."
Barickman hopes that the re-drawing of legislative districts will allow him to run for another term in 2012. A Livingston County native, the 35-year old is a founding partner of the Champaign law firm Bartell, Barickman and Powell. He lives in Champaign, and has served as Champaign County's GOP Chair since 2006.
A drive to raise Illinois taxes dramatically was stuck in "park" Sunday as Democratic leaders came and went without comment and legislators waited for hours.
Gov. Pat Quinn met Sunday afternoon with the Illinois Senate president and House speaker to strategize on their efforts to raise income taxes and sales taxes. All three left through back exits after the meeting rather than answer questions.
Quinn, cornered by reporters as he tried to leave the Capitol through a basement exit, would say only that he's "working hard" to pass a plan that will rescue state government from its paralyzing financial crisis.
A House session scheduled for mid-afternoon was delayed for hours, then ended quickly after representatives voted to end free mass-transit rides for senior citizens.
Lawmakers will be back to work Monday, but with some of their time and attention devoted to the inauguration of Quinn and other statewide officials.
Rep. Joseph Lyons, a Chicago Democrat and a member of House Speaker Michael Madigan's leadership team, called the tax issue a "potential career-ending vote."
"Are the political will and votes there to do it or not? At this stage, I don't know the answer," he said.
Democrats are considering a plan to boost the 3 percent income tax rate to 5.25 percent for four years, a 75 percent increase. They're also looking at a dollar-a-pack increase in cigarette taxes, more than double the current rate.
Together, the increases would produce about $7.5 billion a year, backers say. The money would be used in several ways: to close the gap between annual government costs and revenues, to provide money for education and property tax relief, and to finance borrowing about $8 billion to pay off the state's backlog of overdue bills.
After four years, the income tax rate would drop, although not all the way back to current levels. With officials still negotiating, it was unclear how much the rate would drop.
Supporters of the tax increase argue it must be part of the solution to a budget deficit that could hit $15 billion this year. The deficit is so large that the government is borrowing money to make its annual contribution to retirement systems and is months behind in paying bills.
Democratic leaders want to pass something before the current General Assembly formally ends Wednesday at noon. After that, they lose some of their Democratic majority as well as "lame duck" legislators who might be persuaded to support a tax increase as they leave office.
"Time is running short," said Rep. Lou Lang of Skokie, another member of House leadership.
Dan Rutherford, a Republican who will be sworn in as Illinois treasurer Monday, objected to Democrats trying to pass a tax increase during the lame duck session. He predicted "a tremendous backlash from the public" if it happens.
Rep. Frank Mautino of Spring Valley, a budget specialist for House Democrats, said lawmakers have multiple worries about the tax proposal.
Some object that it would push Illinois' business tax rate to the highest in the country, he said. Others want firm limits on government spending, while others see a need for more property tax relief. Those differences make it tricky to negotiate a plan that can pass, even with Madigan pressing his members to support it.
"There's no one person that can magically make this vote go on its own," Mautino said. "The decision on the tax itself is personal, and it's regional. The suburban people need property tax relief. The downstate guys are concerned with spending."
State officials held a series of receptions Sunday. More events were planned for Monday afternoon, after the inauguration ceremony at a Springfield convention center.
State police said they don't plan any significant changes to security after the Arizona shooting spree in which a member of Congress was critically wounded. But the department said some officers would be added in public areas to serve as a visible deterrent to anyone thinking of causing trouble.
The House voted 95-15 to end a perk that former Gov. Rod Blagojevich granted to all senior citizens, regardless of income: free rides on public transportation across the state.
Transit systems complain that the free service costs them tens of millions of dollars at a time when they're cutting service and jobs. The House bill would limit the free service to poor senior citizens, starting six months after the measure became law.
Shane Cultra's longtime aide, Russell Geisler, will be taking over his boss' Illinois House seat for just one day this Sunday --- the day that Democrats could bring their budget measure to a vote.
Under the plan outlined by Senate President John Cullerton on Thursday night, Illinois' three percent income tax would jump to a rate of five and a quarter. For taxpayers that is a 75 percent increase. After about four years, the rate will drop, making it a solid 25 percent hike.
Champaign Republicans have raised concerns about Geisler's temporary appointment to the General Assembly, saying he should not be allowed to vote during his day in office.
Cultra said he believes Geisler will vote for the legislation to raise the state's income tax, just as he would. The measure also includes an increase in the corporate income tax that Cultra said would make it the highest in the country. The Onarga Republican said the state needs to cut spending before it considers raising taxes.
"This is a huge, huge tax increase," Cultra said. "It's going to hurt people. I think you have to bite the bullet, and start cutting programs back. You're just going to have to start cutting everything."
Cultra could have another chance to vote on the income tax proposal if it comes to the Illinois Senate --- a body he will join next week. But State Senator Mike Frerichs (D-Champaign) said he is not sure if the proposal will make it that far.
Frerichs would not commit to supporting the take hike, which he said he still needs to review. However, he did say along with spending cuts, the state needs to find new revenue to address a deficit that could hit $15-billion this year.
"There's a general agreement in our caucus that we don't want to see devastating cuts to our universities, to our education system, to our pension contributions," Frerichs said. "In order to make those payments, we need to find revenue so that we can pay our bills."
Democrats are hurrying to get the legislation passed before Wednesday when the lame duck session ends. Democrats will still hold the majority in both chambers when lawmakers are sworn in on Jan. 12, though there will be more Republican in the General Assembly.
Illinois legislators are taking a break before Democrats push forward on a major income tax increase.
House leaders will try to round up support for the 75 percent increase before returning to Springfield on Sunday.
After the House adjourned today, Rep. Frank Mautino said the tax plan doesn't have enough support to pass right now. But the Spring Valley Democrat predicts it will pass in the end.
There's little doubt it will succeed in the Senate, which resumes work on Monday. That's when Gov. Pat Quinn and other statewide officials are sworn in for a new term.
Several Republican lawmakers criticized the idea of raising taxes so dramatically, even if most of the increase would expire after four years. They say it would drive jobs out of Illinois.
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