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Child Advocacy Group Warns Of Impact Of Expiring Tax Hike

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SPRINGFIELD, Ill. (CBS) – With the governor’s office warning of a nearly $2 billion budget shortfall next fiscal year, after a 2011 income tax hike expires at the end of December, at least one social service agency that depends on state funding is pushing for lawmakers to keep the tax hike in place.

WBBM Newsradio’s Dave Dahl reports the governor’s office has outlined projections showing a $1.9 billion budget shortfall he next fiscal year, which starts July 1, because the state’s individual income tax rate will drop from 5 percent to 3.75 percent halfway through the fiscal year, on Jan. 1, 2015.

That budget deficit would balloon to nearly $4 billion in fiscal 2016, unless lawmakers act to keep the tax increase in place.

Larry Joseph, director of the Fiscal Policy Center at Voices For Illinois Children, said it’s a grim forecast for social service agencies like his.

“As a result of the expiration of current income tax rates, there’ll be huge revenue losses over the next several years,” he said.

Gov. Pat Quinn is scheduled to present his budget plan for fiscal 2015 next month.

“What counts really is less the speech than the budget documents, and in particular how he proposes to close the projected shortfall of $1.9 billion,” Joseph said.

One possible solution to the looming loss of revenue would be for lawmakers to approve a half-year budget, declare victory, and get out of Springfield in the Spring, but Joseph said that wouldn’t help – and could hurt those who rely on state tax dollars.

“A six-month budget would create great difficulties for school districts, for state universities, for non-profit human service providers, and others who rely on funding from the state,” he said. “So it’s not sound public policy.”

Joseph said the only options are finding $2 billion in budget cuts in fiscal 2015, and $4 billion in fiscal 2016, or keep tax levels at current rates – which is what his organization recommends. That would require a vote to halt a reduction in income taxes at a time when lawmakers are up for re-election in November.

Of course, lawmakers could schedule a vote on the income tax rate after the election, but before the current levels go down. The income tax hike itself was approved in January 2011, at the last minute in the middle of the night, before lame duck lawmakers’ terms expired.

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