From AP - News Headlines -

Il. Democrats Edging Towards Vote on Tax Increase

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.

Categories: Economics, Government, Politics