UPDATED 01/05/10 11:24 a.m.

SPRINGFIELD, Ill. (CBS) — The Illinois budget mess has become so severe that some experts say bond buyers should no longer invest in the state’s debt for fear that the state will default.

But now, lawmakers are working on an 11th-hour solution in the waning days of the current General Assembly session.

As CBS 2’s Mike Puccinelli reports, one solution involves an income tax increase of up to 66 percent. Right now, the state income tax is 3 percent, but the proposal would jack it up by 2 percentage points to a full 5 percent.

It could all happen before the new General Assembly is sworn in on Jan. 12.

On Wednesday, closed-door meetings are in progress in Springfield, as lawmakers try to hammer out a deal on taxes.

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Gov. Pat Quinn, House Speaker Michael Madigan (D-Chicago), and state Senate President John Cullerton (D-Chicago) were among those who attended a meeting Tuesday to talk about raising the income tax rate anywhere from 0.5 percent to 2 percent.

For two years, state lawmakers have been unable to come up with a solution to the state’s budget crisis. Now they plan to try and hammer out a deal in about a week.

Voters say it’s about time, even if that means raising income taxes.

“It needs to be done to raise the revenues we need to get out of the hole,” said Roxanne Rochester of Chicago.

The budget hole stands at $13 billion, and filling it will inevitably cause some pain.

“That sucks when you’re paying more taxes,” said Poe Merley of Chicago.

But right now, some analysts say the state is spending $3 for every $2 it takes in. Thus, an income tax is being discussed.

“They can raise it, but I want to see what they’re going to do with the cuts,” said Eric McMiller of Chicago. “We can’t just raise it without looking at some cuts, so let’s see what they’re going to cut.”

Joseph Brickman says he’s a small-government, low-taxes kind of guy, but even he is resigned to paying more taxes.

“Clearly we’re in a critical situation financially,” Brickman said, “and it pains me because Chicago is a great city.

But Chicago is also a city in a state that some experts say is in the worst financial condition in the country, with $6 billion owed to state service providers right now.

“I think it’s clear evidence of mismanagement,” Rochester said.

In May 2009 — during the early part of the current legislative session — Senate Democrats approved the tax hike proposal.

The Illinois House has yet to vote on that measure, and in the time since, the state’s budget hole has continued to balloon.

Passage of the tax deal seems more likely now, since the election is over, and lawmakers are unlikely to be held accountable for two years before voters next cast their ballots.

(TM and © Copyright 2010 CBS Radio Inc. and its relevant subsidiaries. CBS Radio and EYE Logo TM and Copyright 2010 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press contributed to this report.)

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