Senate Begins Debate On Major Tax Increase

Updated 1/12/11 12:45 a.m.

SPRINGFIELD, Ill. (CBS/AP) — The Illinois Senate has begun debating a major tax increase as Democratic leaders fight the clock and reluctant lawmakers.

The Senate must vote before noon Wednesday or the tax bill dies and the whole process would have to start over.

But some lawmakers were balking late Tuesday night. They were upset that the tax plan approved by the House did not include a cigarette tax that would generate money for schools.

Democratic leaders want to temporarily raise income taxes by two-thirds – from 3 percent to 5 percent. The money would help close the worst budget deficit in Illinois history.

On Tuesday night the Democrats in the Illinois House voted to raise income taxes by two-thirds in a desperate and politically risky effort to end the state’s crippling budget crisis.

“The time for casting aspersions, pointing fingers, playing the blame game, that’s over,” House Majority Leader Barbara Flynn Currie said in sharp exchange with a Republican lawmaker.

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“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,” Currie said, citing the national recession.

The higher taxes would generate about $6.8 billion a year, Gov. Pat Quinn’s office said. That would be a major step toward filling a budget hole that could hit $15 billion this year.

In sheer percentage terms, the proposal could be the biggest tax increase on the long list of increases states have passed while grappling with recent economic woes.

The increase would mean an Illinois resident who now owes $1,000 in state income taxes would owe $1,666 at the new rate, then $1,333 when the tax rate drops to 4 percent after four years.

The proposal passed the House 60-57, the bare minimum needed for it to move on to the Senate. With a new General Assembly beginning Wednesday at noon, senators were expected to vote on the measure later Tuesday night.

Republicans rejected the increase and 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,” Gregory Baise, head of the Illinois Manufacturers’ Association, said earlier in the day as the measure advanced out of committee.

Quinn aides say the Chicago Democrat supports the tax increase, although it is higher than what he had proposed during his tough campaign to be elected to his first full term in November.

Democratic Rep. Greg Harris said if Illinois didn’t pass a tax increase to rescue its finances a host of state agencies would have to close completely and the state could trigger a “cascade” of public and private defaults.

“The wolf is at the door, ladies and gentleman,” Harris warned fellow lawmakers.

To win support from some fiscally conservative lawmakers, legislative leaders did agree to impose strict caps on state spending growth. If spending exceeds 2 percent a year, the income tax increase would be canceled, officials said.

“We’re really trying to handcuff ourselves and the governor in our spending,” said Illinois Senate President John Cullerton, a Chicago Democrat.

Cullerton said the limited growth allowed by the cap would almost certainly be eaten up by rising pension and Medicaid costs, forcing spending cuts in many other areas of government.

Money from the increase will be enough to balance the annual budget and begin chipping away at a backlog of unpaid bills. Illinois regularly falls months behind in writing checks to schools and universities, businesses that build roads or rent offices to the state, and organizations that provide a vast array of social services.

Democrats wanted to accompany the income tax increase with a boost in the cigarette tax but a proposal to more than double the tax to $1.98 per pack failed. Lawmakers could bring the issue back for another vote.

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  • Jim

    Well it was nice living here while it lasted. Jobs will be gone in the next 24 months. Maybe we can all work for Quinn and make $80k/year?

  • bob

    Everyone that’s lost their job, taken p[ay cuts and is struggling to make ends meet must think about this tax increase that’s going to pay lavish pensions and outrageous salaries of public workers. They are not suffering with layoffs or paycuts or even reductions of pension benefits. How many of you even get a pension or have any money left in your 401k after the market crash? If you or your spouse are layed off with no hope in sight think about some clown that’s able to retire at 52 with full pension benefits of 50% or 75%. Think about this next time you vote.

  • James

    Thanks to all that voted quinn in !! He did a bait and switch on you and lied saying he would only increase it 1 percent. Illinois keeps taking from the middle class. Ill be looking to move to a more tax friendly state this year. Thanks Again!!!

  • Soon to be former Illinois resident

    Thanks for taking the Federal payroll tax cut from us before we even had a chance to see it. Can’t wait until 2012 to see how small the take home pay is after the Federal payroll tax break ends. I love Chicago, but its time to start looking for a new state to live in. I like my money too much to give it away to free spending politicians who don’t understand how this impacts those of us who actually work for a living.
    All of you who voted for Quinn, nice job.

  • Sad day

    Mark this day on your calanders as the day the devils stole our souls. This will be the downfall of Illinois, but politicians don’t care because their fat pensions are guaranteed. So I now will be forced to cut big time. I will eliminate eating out (we reduced the amount due to the economy) so with more people in my boat the local restaurants will close down. Notice I didn’t even mention their tax increases. How will state workers get funding when the private sector is being forced out of the state by democrats? I guess these politicians never passed an elementery math class!

  • Cristina

    Maybe instead of increasing taxes, people who are “running” the state should learn how to manage money better! This is absolutely ridiculous. Unfortunately it doesn’t matter who you vote for, they will each do something stupid and self-serving.

  • Erick

    It is a sad day in Illinois. This tax increase puts a band aid on the massive problem created by year after year of careless spending. It places tremendous hardship on the middle class and stifles business. The people suffer now and the state will suffer in a couple years as more and more people earning decent paychecks leave the state and businesses close down. A horrible move by the Illinois legislature and Quinn has broken his campaign promise his first full day after being sworn in. Shame on Illinois for voting him in. Shame on Quinn for pushing for this tax increase. If he signs this tax increase, may the people of Illinois come together to organize a recall and take this state back! We need to take note of every politician who voted in favor of this tax increase and make sure they are not elected for another term next time!

  • bebop

    Funny they couldn’t bring themselves to increase taxes on smokers but have no problem punishing taxpayers that are struggling to pay medical bills and the basic necessaries for their children. The $600 tax increase the article mentions is for someone only making 25k a year. Most people will pay much more.

  • Warner in Kenosha

    It will only be a matter of time before Wisconsin will benefit big off of Illinois financial woes. Both Wisconsin’s and Indiana’s Governors are aggressively going after Illinois jobs now. Kenosha is sure going to get bigger.

  • tug

    Our border states will be very happy.
    The Indiana Governor hit it right on the nose when he said that, having a neighbor like Illinois is like living next to “The Simpsons”..
    By the way their home town was called “Springfield”..

  • sam

    I could swallow an increase if it came with mandatory reform of the government and pension system.

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