Illinois Public Media News
Democratic leaders are fresh off their victory in getting an income tax hike through both chambers of the Illinois General Assembly, but now Republicans in the state Senate are challenging the legislation by calling for its repeal.
State Senator Matt Murphy (R-Palatine) joined his fellow GOP lawmakers in voting against the tax hike, and he is now crafting legislation to repeal the tax increase. Murphy said he is confident an ample number of his colleagues will support the plan, noting that Republicans have more seats in the new legislature. He also said several of the Democratic Senators who voted against the tax hike will continue serving.
"Do I expect the Senate President to allow this bill to move, or the Speaker, or the Governor to sign it?" Murphy said. "I don't, but nobody ever got somewhere by saying I might as well not get started because it probably won't happen."
The legislation calls for a 67-percent increase in the state's income tax along with a spike in the corporate tax. Murphy said the move will cost the state jobs.
It is eliminated that Illinois' budget deficit could reach $15 billion this year. State Senator Dale Righter (R-Mattoon), who serves as the Senate's deputy minority leader, said a tax increase is not something he would make a pledge to block in every situation, but he said in this case, lawmakers have failed to go through the budget line-by-line, and make cuts.
"The tax increase was wrong in the first place," Righter said. "I think it's going to make things worse. It's going to fuel more government spending, and it's going to lead to greater job loss and diminish economic activity."
Governor Pat Quinn says he will sign the income tax legislation, calling it a necessary step to generate revenue.
"It's important for the state government not to be a fiscal basket case, and that's what I confronted when I arrived," Quinn said. "I've said for two years, I said it in campaigns, we needed to restrain spending. We have. And we also need revenue to pay these overdue bills. And we will.
Gov. Scott Walker tried to take full advantage of Illinois lawmakers passing dramatic tax increases Wednesday, saying Wisconsin would welcome any businesses from its neighboring state that care to relocate.
Absent from Walker's sales pitch was the fact that Wisconsin's top income tax rates remain higher than Illinois even under the increase.
Even so, the Republican Walker was reveling in drawing a comparison between Illinois, which has a Democratic governor, and his agenda to cut taxes.
"Years ago Wisconsin had a tourism advertising campaign targeted to Illinois with the motto, 'Escape to Wisconsin,'" Walker said in a statement. "Today we renew that call to Illinois businesses, 'Escape to Wisconsin.' You are welcome here."
Walker referenced Illinois' problem in a speech to business leaders on Tuesday, issued a statement hours after the tax increase vote on Wednesday and then called a news conference to talk about it as well.
Wisconsin lawmakers were picking up on it as well. Rep. Robin Vos, R-Caledonia, said he welcomed any chance to "kind of stick it to them" in Illinois. He said lawmakers there raising taxes played right into Walker's hands.
And while income tax rates are higher in Wisconsin, corporate income taxes in Illinois would be higher.
Wisconsin has a graduated income tax rate that goes from 4.6 percent to 7.5 percent. Illinois has a flat rate that would increase from 3 percent to 5 percent under the move passed by the Legislature to help plug a $15 billion budget hole. Lawmakers there also approved raising the state's corporate income tax rate, effectively moving it from 7 percent to 9.5 percent. Wisconsin's rate is 7.9 percent.
Walker hasn't yet proposed lowering the state's income or corporate tax rates. But he has called for eliminating taxes for companies that move to Wisconsin from Illinois or anyplace else. He also wants to cut taxes on small businesses already in the state. He argues that those moves, along with lawsuit and regulatory reforms, will make Wisconsin a more attractive place to do business.
Vos, co-chairman of the Legislature's budget committee, said he wants to change Walker's small business tax cut proposal into a $1,000 income tax credit to companies for every job created in the state. The Legislature could vote on the tax cut proposals as soon as next week.
The key is that Wisconsin is moving toward lowering taxes while Illinois is raising them, said James Buchen, a vice president at Wisconsin Manufacturers and Commerce, the state's largest business group.
"It just makes Wisconsin look more attractive relative to our neighbor to the south," Buchen said.
Walker has adopted the mantra that "Wisconsin is open for business" and has repeated it at nearly every turn ever since his election in November. He's pledged to add 250,000 jobs in Wisconsin by 2015.
Wisconsin faces a two-year $3 billion budget shortfall. Walker has said his budget, which will be released next month, will balance even with the business tax cuts he's already proposed.
While Walker's talking about taking jobs away from Illinois, Wisconsin's neighbor has already tried to woo Talgo Inc., a train maker that said it will move its manufacturing jobs out of Milwaukee next year because the state rejected federal funds for high-speed rail.
Talgo spokeswoman Nora Friend said Illinois's tax structure would be one of many factors in determining whether the company would relocate its manufacturing there.
"Illinois is still a very strong state because of its strong supply chain and strong will to expand its rail plan," she said Wednesday. "Our analysis includes a lot of factors. (The tax situation) would not weigh in as a positive but it's difficult to say whether it's the deciding factor. It would be one more factor that gets weighed in."
She said Illinois, Washington and Florida are among the top three candidates for Talgo's new site.
In the 11th hour of the 96th General Assembly, lawmakers in Springfield passed an income tax increase, which could chip away at unpaid bills to the state's universities.
But there is another measure in the Illinois House that will be introduced later this year sponsored by Rep. Chapin Rose (R-Mahomet) and Rep. Chad Hays (R-Daville) that seeks to improve the economic outlook for higher education without raising taxes.
"How do we work together in a way that makes sense to do a better job with limited resources?" Hays said. "This is one small step in that direction, and my hope would be that we're having many of these conversations as we go forward."
The legislation would create a moratorium on new, unfunded mandates on state universities. University of Illinois spokesman Tom Hardy said even public policy with the best intentions can lead to mandates which make it difficult for universities to operate in a cost-effective way.
"You know, unfunded mandates that gets talked about frequently are tuition waivers," Hardy said. "That's something that should be looked at to free up potentially millions of dollars in tuition waivers that public universities across the state are funding."
The University of Illinois system is waiting on $413 million in reimbursements from the state. It has explored ways to improve its budget situation through furloughs, department consolidations, and a tuition hike. The U of I's Board of Trustees is slated to vote Jan. 20 on a series of fee increases for its students.
Hays noted that another important part of the legislation includes a provision that would create a single procurement officer who would coordinate purchases for every university in the state.
He added that the legislation was influenced by the recommendations of officials at the University of Illinois and Eastern Illinois University, and he expects the measure to be introduced in the spring.
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.
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