UPDATED: Quinn Defends Income Tax Hike

Governor Pat Quinn Says “We Had To Take Decisive Action. … Our Fiscal House Was Burning.”

UPDATED 1/12/11 – 6:05 p.m.

SPRINGFIELD, Ill. (CBS) — Gov. Pat Quinn is defending his support for a massive income tax increase, saying the state was facing a crisis and “we had to take decisive action.”

The General Assembly worked overnight Wednesday to approve a plan to raise the personal income tax rate from 3 percent to 5 percent for the next four years. Then the rate drops to 3.75 percent. In 2025, it would drop again to 3.25 percent.

When he ran for governor last year, Quinn said he would only sign an increase of half that size, but he shrugged off criticism that he was breaking a promise to voters.

LISTEN: Newsradio 780 Political Editor Craig Dellimore Reports

LISTEN: Mayor Daley Opposes Income Tax Hike, Craig Dellimore Reports

“We have an emergency, a fiscal emergency. Our state was careening towards bankruptcy, to fiscal insolvency,” Quinn said.

The governor denied he had been dishonest with voters for pushing for a 1 percentage point tax hike, but later agreeing to the 2 percentage point tax hike. Quinn said financial experts told him the state’s budget problems got worse in the last two months, prompting a need for a larger income tax hike.

“Our house was burning,” Quinn said. “Our fiscal house was burning.”

Quinn said it’s important for the Illinois economy that state government not be a “fiscal basket case.”

“This is a temporary income tax to deal with the immediate fiscal emergency our state faces; to pay the bills so we don’t have severe cutbacks in education, health care, public safety, important things that are absolutely vital to the lives of the citizens,” Quinn added.

He also pointed to spending restrictions included in the tax plan that would limit spending increases to 2 percent a year.

If officials spend above those limits, the tax increase will automatically be canceled. The plan’s supporters warned that rising pension and health care costs probably will eat up all the spending allowed by the caps, forcing cuts in other areas of government.

The limits allow next year’s spending to increase considerably so the state can make its required contribution to government retirement systems, pay overdue bills and cover other costs that had been shoved aside. After that, however, spending could not grow more than 2 percent annually for the next three years or else the tax increase would be reversed.

“We have to understand that solving our budget and fiscal problems and paying our bills relies on restraint of spending today and tomorrow,” Quinn said. “These are very hard caps on spending.”

As CBS 2 Chief Correspondent Jay Levine reports, the tax plan became reality in part due to backroom dealing between Quinn and top Democrats during the final hours of the lame duck legislative session.

Several African-American lawmakers signed onto the deal only because of a $250 million deal for education funding.

Sen. Rickey Hendon (D-Chicago) said the tax deal would not have gone through without a commitment for that money for public schools.

“The governor and (Senate President John Cullerton) said we’d get some money, $250 million for education,” Hendon said.

He said that “without a doubt” he and others were ready to walk away from the tax deal without that concession.

Quinn defended the agreement to set aside $250 million for public schools, saying that a good education system is vital to a good economy.

With the tax plan expected to raise nearly $7 billion a year in new revenue, several other things must go according to plan to close the state’s $15 billion budget deficit.

The state owes $8 billion in unpaid bills to various contractors and service providers and a bond deal to borrow money to pay those bills failed, but lawmakers could try again.

With a structural deficit of about $6 billion a year, the tax hike might be enough if revenues continue to go up, if lawmakers stick to spending caps put in place as part of the tax deal and if the tax hike doesn’t drive too many businesses out of the state.

But Republican critics say the hike will harm middle class families.

“This means hundreds of dollars for Illinois families that they’ll be paying more to the State of Illinois, and the irony is the money they have been sending to the state has been so grossly mismanaged for the last decade,” said state Senate Republican Leader Christine Radogno (R-Lemont.)

The tax hike is not set up to be permanent. After four years, it drops to 4 percent.

“This is always tough to raise taxes,” Cullerton said. “We’ve done it before under Republican governors, and when there’s been big recessions, and that’s what we responded to.”

The higher taxes will generate about $6.8 billion a year.

In real numbers, if your gross income is $50,000 a year, your state income taxes will rise from $1,500 to $2,500 a year.

The hike will also boost the corporate income tax rate by nearly 50 percent, from 4.8 percent to 7 percent. In 2015, it would drop to 5.25 percent and in 2025 would drop again to the current rate of 4.8 percent.

In addition to the corporate income tax, many businesses in Illinois pay a “Personal Property Replacement Tax” of 2.5 percent of income, bumping their corporate tax rate to 9.5 percent.

LISTEN: Newsradio 780’s Kris Kridel reports on reaction from business groups

The governor said the plan is vital to turning around the state’s overall economy.

“To have a strong economy you have to have the state of Illinois in fiscal good shape,” Quinn said.

The proposal passed the House on Tuesday night 60-57, the bare minimum. No Republicans backed the measure there or in the Senate, where the measure passed 30-29.

Other pieces of the budget plan failed.

Lawmakers rejected a $1-a-pack increase in cigarette taxes, which would have provided money for schools. They also blocked a plan to borrow $8.7 billion to pay off overdue bills, which means long-suffering businesses and social-service agencies won’t get their money anytime soon.

House Speaker Michael Madigan (D-Chicago), sounding weary, said Republicans should have supported some parts of the plan instead of voting against everything.

“They’re on the sidelines. They don’t want to get on the field of play,” the Chicago Democrat said. “I’m happy that the day has ended.”

But Republicans noted they were not included in negotiations. They also fundamentally reject the idea of raising taxes after years of spending growth.

“We’re saying to the people of Illinois, ‘For eight years we’ve overspent, now we’re going to make it your problem,”‘ said Rep. Roger Eddy. “We’re making up for our mistakes on your back.”

Republicans predict the tax eventually will be made permanent.

“It’s a cruel hoax to play on citizens to say this is temporary,” said House Minority Leader Tom Cross, R-Oswego.

Democrats bristled at being blamed for the state’s financial problems, although they’ve controlled the governor’s office and both legislative chambers since 2003.

They said some of the problem began under Republican governors and that Republicans backed some budgets that increased spending. They argued the national recession sent state revenues into a nosedive and that Democrats already have cut spending by billions of dollars.

“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,” said House Majority Leader Barbara Flynn Currie, D-Chicago.

The new tax money will balance the state’s annual budget and let officials begin chipping away at the backlog of unpaid bills. Borrowing money, and then repaying it with a portion of the tax increase, would have allowed those bills to be paid immediately, aiding organizations that provide services for the state but go months without being reimbursed.

The delay and the spending limits are “very troubling” to those groups, said Sean Noble, policy director for Voices for Illinois Children, a member of the statewide Responsible Budget Coalition. Still, he called the tax increase “an enormous step” toward putting Illinois on sound financial footing.

Republicans 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,” said Gregory Baise, head of the Illinois Manufacturers’ Association.

Democrats countered that even with the increase, Illinois’ tax rate will be lower than in many neighboring states — Iowa’s top rate is 8.98 percent, Wisconsin’s is 7.75 percent. They also maintain that without more money, state government may not be able to pay employees by the end of the year. Major government services might have to be halted, they warn, and groups waiting for state payments will go under.

Spending limits were added to the plan to win the support of some suburban Democrats. Republicans said the limits don’t do enough to clamp down.

(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.)

  • http://borntobepolitical.wordpress.com borntobepolitical

    “Nero ascended to the roof of the palace from which there was the best general view …………………………

  • Lew

    What this boils down to is one class of people supporting another. Private sector employees are forced to supplement the lifestyles of losers in the public-sector who were too stupid to get a job in the private sector. Thank you idiots who voted for Quinn. Im sure most of you morons don’t know what it means to work hard for something.

    • Tom D

      or Lew were you too stupid to get a job in the public sector, we too pay taxes and if IL wouldn’t rape and pilliage our tax and pension system we wouldn’t be in this mess. Before you exercise your right to run your trap look into what you are talking about.

      • Grace

        Ya, you pay taxes, but you enjoy a better pension and healthcare than those of us in the private sector…all at the taxpayers expense. The anger comes from the fact that the Democrats wouldn’t do what needs to be done….cut some of those perks. I’ve had a huge hit working in the private sector not only with my salary, (no pay raise in 3 years) but increase in healthcare expenses and other things..and now I will even have less for my everyday living expenses and my retirement in order to pay for yours. This is what all the anger is about. Why should I have less in order to support YOU!

      • bob

        No other job in America gives pensions of 50 or 75% which can be started at only age 52 then you guys start whining when they want to up the age a year or two. We’re now the laughing stock for the entire country for how these lavish pensions have put IL into bankruptcy. We’re now the focus of network news. Quinn & Madigan could have easily restructured the pensions like what most other workers get, 27k a year. If you guys don’t like it get a private sector job where you have to actually work for your pay and actually know how to do something. Public workers aren’t the best & brightest but those connected to some dept head or politician.

  • Jim

    Quinn is a liar and a moron. My financial situation is now worse so I should ask my employer for a 66% raise? We are run by dumb people. My only solice is that I will be utilizing EVERY public office and benefit to the MAX. I will call the Governors office to ask for weather and sports updates because I am paying good money for them to be there!

  • Jackhole

    Federal Government can bail banks out when they are in crisis but can’t bail a state out when they overspend? So in turn the tax payers go into debt more and the economy gets worse. We should all move out of Illinois and see what happens! Most likely I will be out of business next year due to the increase. Thanks Quinn!
    If we didn’t vote for him do we still get the increase??

  • Jeremy Cordell

    Perhaps, we should simply take all the congressional salary dollars and use that to pay off the debt of the state. Since it is extremely evident that everyone at the state capitol has not done there job … like learn how to balance a checkbook like the rest of us!

    • Gene

      Great point on balancing the checkbook!!!

  • Mike S

    It is time to exit the state! I just have two family members left. It will make it an easy sell to say welcome to Indiana.

    I left in 1987 and have been able to get 14 family members to leave IL.

    Thanks for helping the Indiana Economy!

  • Mike Allen

    He is just another Democrat that lies through his teeth! Illinois voters, we have no one to blame but ourselves. We cleaned house in the legislature pretty well, sent a good man to the U.S. Senate, but EPICALLY FAILED to put a man in the governor’s mansion that would be good for us as a state. Now Quinn can continue running our state like the city of Chicago is run: with corruption and no sense of morality. Now we pay the price with insane tax increases and this man’s idea of fixing Illinois that will put us deeper into our already huge mess. Perhaps next election we will learn!

  • A fed-up business owner

    Now I’ll have to raise the prices of my products which sill kill my sales which will result in laying off employees which will reduce taxes paid to the state which will only make the situation worse….what don’t the Dems get?

    Time to move out of this God-forsaken state…

  • Katie

    Gov Quinn did exactly what he said before the campaine and during the campain. I did not vote for him, Of course he is happy, the Illinois people once again have to bail out the state. This is total wrong. I live within my means, have no choice. Why can’t the state of Illinois. Please here are fighting to keep there heads above water. Taking more money will make it worse. Move Company’s that can hire people move to other states. Sad day. Why won’t anyone in government offices really listen to the people who live here in IL?

  • espina

    the whole state GOV needs to be replaced and start over with all new people reform welfare state salaries everything get rid if jobs that are not needed get down to the bare bones of what is needed to run the state and send everyone else packing .some of the jobs were created for friends and family get rid of them that would save the state those jobs were not really needed to begin with

  • be

    we should all protest the increase by not paying our taxes if we owe this yea rin fact don’t even file

  • concerned

    Clearly our state is run by idiots. I like how personal and corporate taxes have gone up but lets not upset all the smokers in the states by increased cigarette taxes. I can see the exodus of people beginning.

  • Rob

    Governor Pat Quinn Says “We Had To Take Decisive Action. … Our Fiscal House Was Burning.”

    If he said this then way was spending not cut?

    • A

      Try living on $35,000 a year, looking for a new job that pays better. Having your resume going to a friend of your boss and person calls your boss and tells him you are looking and then you get let go for looking and find yourself unemployed and looking for a job at the age of 62.

      • Response

        “What a country”

    • a

      Try looking for a job when you are 62

    • Marie

      Quinn is brainless

  • Linda

    Why don’t the politicians take a 6-10% cut in pay? They have money from side jobs, their cars, travel and food are paid for by US, the taxpayers. Then we are double taxed by taxes taken out of our check every week and then when we buy something we’re taxed again. Look at the cars in Illinois and money from the plates alone. Where in the hell does the money go!?! They take OUR hard earned money, spend it any way they choose, get the state in debt and the WE have to bail then out. How in the hell is this fair?!?
    The state campaigns for people to stop smoking without realizing that if everyone in Illinois DID quit this state would be in a bigger mess – so go ahead keep raising the cigarette taxes and I pray it backfires.

  • Shannon Pearce

    F U Quinn. You are a joke!


    These lousy liberal democratic tax and spend jerk offs don’t care one bit about the people of this state!!! I hope ALL you who voted democrat are happy about this. I really and truly hope to leave this crooked state for good!!!! A one finger salute to Quinn, dems, and ALL those that voted for them!!!

    • Oooops

      I meant to say KCUF…………………………….backwards or forewards it’s all the same………………….DEMOCRATS ARE CROOKS!!!!! So damn mad I can’t even spell!!!!


    Illinois is a cesspool of corruption, PERIOD!!!!

  • Ed

    Work your whole life, live by the rules, then get stabbed in the back by Quinn, Madigan, Cullerton and all the Dems who voted for this. They voted to end the death penalty, because they are killing Illinois and the hard working taxpayers. I guess this will teach people to be bustouts, It’s the way of life in his state, don’t work and get rewarded, bust your butt so they can take it from you. When will Americans and Illinoisians WAKE UP

  • Jacqueline Burke

    Lets see how long it takes before the big shots give themselves a raise.. Maybe the government should match our 5% and take a 2% cut.

  • http://borntobepolitical.wordpress.com borntobepolitical

    It seems that he and his policies are universally hated, how dose he keep getting elected?

    Is everybody in Il a certified masochist?

  • Bill

    The level of corruption in Chicago and Illinois as a whole just came knocking at the door for a free handout. I hear on the news all the time how state and local govt waste tax payers money. Hire people not qualified for the jobs they hold due to friends in high places. Waste, waste and more waste. When you can’t figure out how to continue it, take it from who ever you want. Pat Quinn, enjoy your term as governor, it will be your last. As well as the other democrats that think it’s ok to take our money and waste it. If they just fixed a small percentage of the corruption they could balance everything. Inaugural ball? Really?

  • AnyBodyButRahm

    Quin is a filthy liar. He should be ashamed of himself. To stand there and say “experts” told him things got much worse in last two months is abominable; it is a good thing his pants didn’t burst into flames right then and there.

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    […] Quinn Defends Income Tax Hike Gov. Pat Quinn is defending his support for a massive income tax increase, saying the state was facing a crisis and “we had to take decisive action.” Read more on CBS Chicago […]

  • JK

    The politicians are all a bunch of crooks! If past state history is any indication, the tax increase WILL become pernament. You can count on that!

    • Nighthawk


  • tom c

    recently the states of virginia and new jersey resolved their budget problems without raising taxes. maybe our governor should talk to them about what they did. o i forgot our governor is a democrat and against cutting spending and going after waste like the above mentioned republican governors did.

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