Illinois Public Media News
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.
Top Illinois Democrats have agreed to push a plan that would temporarily boost income taxes by 75 percent and double cigarette taxes, Senate President John Cullerton said Thursday.
Illinois' personal income tax rate, now 3 percent, would climb to 5.25 percent for four years under the plan Cullerton outlined. After that, it would drop to 3.75 percent.
That means someone who now owes $1,000 in state income taxes would owe $1,750 at the new rate, then $1,250 after four years.
The permanent portion would be used several ways. Some would be devoted to schools and some to repaying an $8.5 billion loan that would be used to pay overdue bills, Cullerton said.
Another chunk would go to property tax relief in the form of annual $325 checks, he said. The checks would replace the property tax exemption that homeowners can now claim on their income taxes.
Cullerton said House Speaker Michael Madigan and Gov. Pat Quinn fully support the tax proposal, although Quinn once promised to veto any increase of that size.
Madigan's spokesman said he couldn't discuss the speaker's position. The Senate has approved tax increases in the past, so the biggest question about this proposal is whether Madigan can find enough votes to get it through the House.
The governor's office put out a statement that stopped short of saying the three leaders had reached a final agreement. Rank-and-file legislators said Quinn described the tax plan to them earlier in the day and portrayed it as a deal among all three of the powerful Democrats.
Democrats say they have no choice but to raise taxes as one part of a solution to Illinois' massive budget crisis. The state deficit could reach $15 billion in the coming year. The government is borrowing money to cover some obligations, letting bills go unpaid for months and cutting corners everywhere from state prisons to state parks.
"We are in desperate need," Cullerton said at a news conference in his office.
Cullerton said the higher taxes would generate about $7.5 billion a year during the four years they're at their highest.
The tax on cigarettes, now 98 cents a pack, would jump to $1.98, Cullerton said. The money would be earmarked for education.
Quinn, Cullerton and Madigan want to pass something before the current General Assembly formally ends Jan. 12. After that, they lose some of their Democratic majority as well as outgoing legislators who might be persuaded to support a tax increase as they leave office.
Madigan has repeatedly said he doubts that a tax increase could pass in the House without Republican support. But Republican leaders have not been included in tax and budget negotiations, and there was no indication Thursday that they were prepared to cooperate with the Democrats.
"If they think this is a solution, they should go ahead and put their own votes on it," said Senate Minority Leader Christine Radogno, R-Lemont.
Cullerton emphasized that taxes would be just one part of the solution.
Quinn and the Legislature already have cut spending significantly. They've also reduced pension benefits for future state employees and passed a plan to help limit the cost of providing health care to the poor.
Cullerton said there also will be a moratorium on new programs and spending growth would be held to 1 percent a year.
"We are not doing a short-term fix," he said.
The tax proposal puts Quinn in an awkward position. It would boost the tax rate by 2.25 percentage points, but the governor promised last year to veto any increase above 1 percentage point.
Last summer, a Quinn aide suggested taxes might have to be raised by 2 points. Quinn quickly disavowed the comments and said he opposed anything beyond his proposed hike of 1 percentage point.
"I'm going to veto anything that isn't my plan," Quinn said at the time.
Quinn's office didn't comment Thursday on the conflict between the tax plan and his campaign promise.
Radogno said it would be "dishonest" for Quinn to approve it after promising a veto.
"To me, that's kind of a bait and switch," she said.
A company in Decatur that produces police radar and traffic enforcement equipment for police agencies in the United States and in other countries is moving its manufacturing division to Arizona and California.
Decatur Electronics will relocate the department to a larger 50-thousand square foot facility near Phoenix Sky Harbor Airport, and it will also set up an assembly line in San Diego. Forty-three workers would be affected as a result of the move, and 10 of those employees are customer service representatives who will relocate to Arizona.
Tim Roberts, the company's customer service manager, said the sluggish economy has meant that fewer law enforcement agencies are buying new equipment, and instead ordering upgrades or repairs. He said the motivation behind the move is part of an effort to strengthen business
"We're going to a much bigger facility that will allow us to expand our business in the international market as well," Roberts said. "We do service people all over the world, and we need to continue that. So, this will allow us to serve those customers better."
Roberts said it is unclear how many jobs will ultimately be eliminated. He said the company will provide interview training and resume writing workshops to help employees find new work if they lose their jobs.
"We appreciate the functionality and the people who have been here during this time," he said. "We're going to do everything we can to make sure they get job placements and/or transition smoothly."
Relocating the company's manufacturing base is expected to take about three months. The company, which is owned by U.K.-based Bowmer and Kirkland, says the move will not disrupt services or the delivery of products.
Illinois lawmakers are considering a major overhaul of the program that provides medical care to the poor, part of an effort to control costs during a budget crisis and build support for a tax increase.
The legislation would emphasize HMO-style "managed care" and reduce the use of costly institutions for people with physical and mental disabilities. It would require the state to pay Medicaid bills sooner, reducing late-payment penalties. It also would take steps to ensure ineligible people don't sign up for medical care.
The lawmakers who negotiated the changes predict they'll save at least $800 million over the next five years. That would amount to roughly 2 percent in a program that costs about $7.6 billion a year.
But with the state budget in a shambles, legislators are searching desperately for any place to save money. In addition, Democratic leaders trying to pass an income tax increase could point to the Medicaid changes as evidence that they're cutting back and not simply grabbing for taxpayers' wallets.
Gov. Pat Quinn met repeatedly with legislative leaders Wednesday, searching for some version of a tax increase that could attract enough support to pass. There were no indications of a breakthrough that might generate the mix of Republican and Democratic votes that would almost certainly be needed to pass such a touchy measure.
Quinn, Senate President John Cullerton and House Speaker Michael Madigan want to pass something before the current General Assembly formally ends Jan. 12. After that, they lose some of their Democratic majority and the outgoing "lame-duck" legislators who might be persuaded to support a tax increase as they leave office.
The state's budget deficit could hit $15 billion this year.
The Medicaid legislation passed in the Illinois Senate 58-0 and now goes to the Illinois House.
Sen. Heather Steans, D-Chicago, acknowledged the changes would save relatively little money. But she and others portrayed it as an important first step toward streamlining Medicaid.
"This is turning an enormous ship. It's hard and it's going to take a lot of work," Steans said.
The bill would require at least half of Medicaid clients to be placed in HMO-style managed care by 2015. It also would make it easier to transfer money to help move disabled people from expensive institutions into cheaper residential care.
Another change would end a policy that allows Medicaid bills to go unpaid for months. That practice costs the state late-payment penalties and disguises the depths of Illinois' financial problems.
Other changes would help ensure that only eligible people enroll in Medicaid. Clients would have to provide additional evidence that they meet income requirements, live in Illinois and, for continuing clients, that they're still eligible.
Health officials are moving forward with a plan to transfer residents living in Rantoul's Cherry Orchard apartments to new homes.
This is in response to health concerns that have marred the apartment complex for nearly two and a half years. Health inspectors learned in Sep. 2007 that there was something wrong with the Cherry Orchard apartments after discovering sewage seeping from a septic system into nearby farmland. Since then, there have been reports of mold, inadequate heating, and power outages.
The landlords of the property, Bernard Ramos and his father, Eduardo, promised that by late last year they would address the septic tank issue by moving tenants into housing units that were up to code. Ramos told health officials that he would vacate two of the apartment buildings (#7 and #8) by Dec. 3. Then two other complexes (#2, #3, and #4) were supposed to be unoccupied by Dec. 20. Jim Roberts is the Director of Environmental Health with the Champaign-Urbana Public Health District (CUPHD). Roberts said there is only one building known to have a fully functioning septic system (#6).
"Ramos agreed to move people from occupied buildings to maybe another building that would have a properly treated sewage, and he failed to do so," Roberts explained. "What we're trying to do is we're trying to eliminate the people from the places that we know have raw, untreated sewage."
By Wednesday afternoon, there were still around a dozen residents living in the apartments. The landlords of the Cherry Orchard apartments are scheduled to appear in court on Jan. 24 for failing to move their tenants and fix their sewer and septic systems as originally promised.
"I don't have enough money to move to another apartment," said one tenant who has lived at Cherry Orchard with her four children for the last year and a half. "It's not good for someone to live there."
The Cherry Orchard apartments are home to many migrant workers who spend part of the year in Rantoul working for one of the large agricultural companies, like Pioneer, Monsanto, or Syngenta. Many of those workers move to Rantoul in the summer to work during the harvest season, and leave before the winter.
"We need to prevent people from moving in there until this (health) issue is addressed," CUPHD administrator Julie Pryde said.
After a meeting Wednesday night between health officials and the tenants, the Salvation Army agreed to temporarily move Cherry Orchard's current residents into hotels. The CUPHD is now trying to move those individuals into permanent homes with assistance from other human service agencies, like the United Way and the Illinois Department of Children and Family Services.
The Cherry Orchard apartments, located on U.S. 45, are in an unincorporated part of Rantoul, making it difficult for health officials to enforce zoning ordinances. Pryde said her department is pushing to tighten the county's housing codes.
"It's not a problem that does not have a solution," she said.
(Photo courtesy of the Champaign-Urbana Public Health District)
Illinois Democrats edged closer to a vote on raising income taxes during a lame-duck session of the state Legislature, as the governor met with legislative leaders Tuesday and lawmakers considered measures that would put new restrictions on state spending.
Senate President John Cullerton, D-Chicago, said Democratic leaders want the House to approve a version of the tax increase that passed in the Senate nearly two years ago. That plan would boost the personal income tax rate to 5 percent, from the current 3 percent.
Meanwhile, a new report from a University of Illinois think tank concludes that the state's budget crisis is even deeper than most people realize. The deficit is usually placed at $12 billion with a possibility that it will reach $15 billion, but the Institute of Government and Public Affairs says the shortfall is really $17 billion and climbing.
"It is hard to overstate the depth of the fiscal hole the state is in," the report said. "If nothing is done soon, the state of Illinois faces a very bleak future."
Cullerton and House Speaker Michael Madigan, D-Chicago, want some Republican support for a tax increase. That would help insulate Democrats from the potential public outcry over higher taxes. So far, however, Republican leaders have opposed any tax talk.
Democrats are pushing several measures that might help attract GOP support and blunt public criticism.
Madigan, for instance, is sponsoring two constitutional amendments. One would limit government spending growth to the same level of growth that Illinois taxpayers see in their own paychecks. The other would make it harder for state and local government to approve costly benefit increases in pension plans.
Both amendments have been approved in committee and now await action on the House floor.
Democrats also are trying to reach deals on Medicaid costs, school management and worker's compensation.
Together, the measures could be used to argue that Democrats are serious about handling tax money more responsibly if an increase is approved.
"I think what we have to do is pay our bills," Cullerton told reporters after meeting with Madigan and Gov. Pat Quinn. "I think we have to make sure our bond rating is improved and people see that, going forward, we can pay our bills. If people look at it from that perspective, I think it's something that they would accept."
A new Legislature will be sworn in Jan. 12. It may be easier to pass a tax increase before then, while Democrats still have a large majority and some outgoing members can act without worrying about a future voter backlash.
Democratic leaders, however, won't say whether they're prepared to try to pass a tax during the lame-duck session if they can't pick up any Republican support.
A spokeswoman said House Republican Leader Tom Cross met with the governor Tuesday morning and Quinn discussed raising income taxes by just half a percentage point and using that revenue to pay off $14 billion in new debt. Spokeswoman Sara Wojcicki said Quinn offered few details and that Cross reiterated his calls for government spending reforms before considering higher taxes.
There was little evidence Tuesday to suggest that Democrats and Republicans were coming to any accord.
The governor and Democratic leaders did not include top Republicans in their meeting. Republicans opposed Madigan's constitutional amendments to control spending, arguing either that they don't go far enough or they go too far. And a Senate committee voted along party lines to borrow roughly $4 billion and use the money to make the state's annual contribution to government pensions.
The economy may still be slowly improving in Illinois, but the author of a monthly gauge of the state's economic performance says it's far from healthy.
For the seventh consecutive month, the University of Illinois Flash Index went up. In December, the index measured 94.9, up .7 from November, but 100 is the break-even point between growth and contraction, and economist Fred Giertz said the slow growth has not been very noticeable.
Giertz said unemployment remains a problem, even though the state's jobless rate is slightly under the national average -- a rare occurrence.
"It may just be an aberration, or it may be that our industries, especially agriculture, are doing fairly well," Giertz said. "Some of the exporting industries are doing alright, and we were not really devastated by the crisis with real estate or things of that sort."
Giertz is also not too concerned that Illinois or the nation will see a return of inflation in the near term. Rising commodity prices, bailout legislation and the Federal Reserve's decision to enact "quantitative easing" have prompted some to warn of an effect on overall consumer prices. But Giertz does not detect any unwillingness in financial markets to lend money at the current very-low interest rates.
"The fact that people ware willing to lend money for the long term at relatively low interest rates suggests that people don't think there's going to be a lot inflation on the horizon," Giertz said. "The Federal Reserve is very wary of the possibility (of inflation). They've made mistakes in the past and I think their intention is to start reining things in once the economy gets going again."
Giertz said there is some good news in the weak Flash Index numbers. He said revenue from sales taxes was up in December, marking a better holiday shopping season than many retailers had expected. The Index uses revenue reports from state income, sales and business taxes to calculate its measurement.
Illinois Gov. Pat Quinn has signed legislation affecting the pension system for law enforcement officers and firefighters.
Quinn signed the law Thursday. His office says it will stabilize pension systems and protect retirement benefits for the officers and firefighters. However Chicago Mayor Richard Daley says he's disappointed Quinn signed the law, saying it will burden Chicago taxpayers.
The new law will affect those hired on or after Jan. 1. Quinn's office also says it will help municipalities fund pensions.
Daley's office says the new law will increase the city's annual police and fire pension contribution from an projected $309 million in 2015 to about $856 million. The new law normalizes retirement ages, sets a maximum pension and begins monthly cost-of-living adjustments at age 60 for retirees and survivors.
Energy company Dynegy will be closing its Vermilion Power facility near Oakwood by the end of March.
Company spokesman David Byford said mothballing the more than 50-year old facility largely comes down to economics.
"We have higher fuel costs at Vermilion because the plant is not located on a rail line," Byford said. "And that would be coupled with market conditions that would include reduced power demand and lower power prices that don't favor continued operations."
During a year-long review, Byford said company heads looked at options for the plant, including alternative fuel supply arrangements. But he said the price of fuel for supplying the plant with its coal also proved to be too much.
"We took a year exploring numerous options for the plant that included looking at alternative fuel supply arrangements," Byford said. "But in the end, we're still faced with poor plant economics."
Byford said the plant is no longer being used all the time, and he said a regional power grid ensures a reliable power supply to the area. The precise closure date for the plant is not known, but it is expected near the end of the first quarter of 2011. The company said the next step is for Dynegy to develop plans for suspending operations in a safe and reliable manner. The plant has about 50 employees, and Byford said it is not yet known whether they will be offered jobs elsewhere in the company.
Once again, unemployment is down from a year ago, in all 12 of Illinois' major metropolitan areas.
The Illinois Department of Employment Security reported that November was the third month in a row that unemployment has declined in all 12 metro areas from a year ago. It's the fourth month of such declines for the Champaign-Urbana and Danville areas, and the fifth consecutive month of declines for the Decatur area.
In Champaign-Urbana, the November unemployment rate was 8.2 percent, down from 8.9 percent. In Danville the rate was 11 percent, down from 11.7 percent, and in Decatur, the rate was also 11 percent, down from 12.1 percent.
November unemployment ranged from 7.1 percent in the Bloomington-Normal area to a high of 13.7 percent percent in Rockford.
Figures for 18 east-central Illinois counties showed jobless numbers improved from a year ago in every county but Douglas. November unemployment for Douglas County was 9.2 percent, up from 9 percent percent a year ago.
While the unemployment rates are better than a year ago, the total numbers of non-farm jobs have gone down in Danville and Decatur, and are unchanged in Champaign-Urbana.
Statewide, only Rockford and the Illinois side of the Quad Cities showed an increase in non-farm jobs from November of last year. IDES spokesman Tom Austin says the unemployment rate and the survey of non-farm jobs are compiled separately and do not always correlate. He says that among the contributing factors are workers who find jobs outside of their county or metro area.
Illinois' statewide unemployment rate was 9.2 percent. That's just below the 9.3 percent national average.
(Additional reporting from the Associated Press)
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