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Stalemate On Income Tax Debate

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Illinois State Capitol

Illinois State Capitol buillding in Springfield (AP Photo)

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Updated 1/10/2011 at 10 p.m.

SPRINGFIED, Ill. (WBBM/CBS) – Lawmakers in Springfield still cannot come to an agreement on whether to increase the state income tax before the new Illinois General Assembly is sworn in later this week.

As WBBM Newsradio 780’s Bernie Tafoya reports, lawmakers were in session Sunday, and while Gov. Pat Quinn, House Speaker Michael Madigan (D-Ill.), and Senate President John Cullerton (D-Ill.) agree on an income tax plan, there apparently are not enough votes for it.

LISTEN: Newsradio 780’s Bernie Tafoya reports

“I’m here today to say that we will pay our bills, that we will stabilize our budget,” Quinn said during his inaugural address. 

But Republicans are still opposed to tax hikes.

“We’re going to let them enjoy their celebration here, but we get back to the capitol this afternoon it’s still about working to defeat that tax increase,” said state Sen. Bill Brady, R-Bloomington, who ran against Quinn in the November election.

A spokesman said Quinn was meeting with key lawmakers between inaugural events in what were called “productive conversations.”

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.

Rep. Susana Mendoza, D-Chicago, said there are suggestions to scale back the business side of the tax and reducing the proposed personal income tax hike from 5.25 percent to 5.

“There’s a lot of moving parts and that’s just one thing,” House Speaker Michael Madigan, D-Chicago, told reporters after a meeting with Quinn Monday night.

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.

But opponents say there should not be a tax increase right away, and instead, the new legislature should examine the state budget and chop away any unnecessary spending first.

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.

Trying to beat Wednesday’s deadline doesn’t seem like good business to the new Illinois’s new state treasurer. 

“I’ve never said I am adamantly opposed to an income tax increase, but I am not going to be embracing an income tax increase until I see that we have fundamentally restructured spending,” Dan Rutherford, a Republican, told CBS 2 Chief Correspondent Jay Levine.

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