Quinn Budget Expected To Keep Spending Flat, Provide Middle-Class Tax Relief

(CBS) -- CBS 2 has learned that Illinois Governor Pat Quinn's 2014 budget to be unveiled Wednesday in Springfield is expected to include tax relief for the middle class.

But what Quinn does about the temporary 66 percent income tax increase due to expire at the end of the year is another question.

CBS 2 Chief Correspondent Jay Levine reports the Governor is holding the line on discretionary spending and he's got to because the money just isn't there.

The state still owes billions to vendors, but he still intends to find money for some form of middle class tax breaks and new programs he considers priorities.

Then there's the elephant in the room. Rolling the temporary five percent state income tax would reduce revenues by $1.8 billion next year, $3.6 billion for the year after that, and almost certainly require major cuts in education and public safety.

Virtually no one thinks he'll do it even though election year voters are strongly in favor of it.

"You should continue the temporary income tax for one year," said Lawrence Small of the Civic Federation.

Msmall and The Civic Federation suggest a gradual rollback after that and among other proposed alternatives, a progressive state income tax.

"This is a way we can generate the revenue we need to provide the core services upon which people depend and do so in a way that provides tax relief to 94 percent of Illinois families," said State Senator Dan Harmon (D-Oak Park)

Low income families would pay 2.9 percent and those making more than $180,000 would pay 6.9 percent.

House Speaker Mike Madigan's proposes taxing million dollar incomes an additional 3 percent.

"It just sends another signal that if you have wealth in this state maybe you oughtta be thinking about Florida or Texas or Tennessee or some other state where they're not gonna go after you," said Doug Whitley of the Illinois Chamber of Commerce.

Wednesday, sources tells Jay Levine Governor Quinn will roll out a 2014 budget where spending is virtually flat while likely providing more money for programs like early childhood education and a roadmap to what sources call long-term financial security.

"We have a blueprint for the next five fiscal years," said Quinn.

The kind of certainty, and stability is what business is looking for.

"They need to know that their investments are going to have a certain rate of return over 20 years, not over the next year or six months and then have the tax structure change," Msall.

The Governor is expected to weigh in on proposals to tax retirement income. Quinn's Republican opponent, Bruce Rauner, who'll be in Springfield Wednesday as he was for his January State of the State Address, has declined to say what he'd do. Governor Quinn sources tell us, is firmly against it.