Thread: Illinois Lawmakers Hike Taxes 66 Percent to Balance Budget

Illinois Lawmakers Hike Taxes 66 Percent to Balance Budget

Wednesday, 12 Jan 2011 09:11 AM

Democratic Illinois lawmakers beat a looming deadline and approved a 66 percent income-tax increase in a desperate bid to end the state's crippling budget crisis.

Legislative leaders rushed early Wednesday to pass the politically risky plan before a new General Assembly was sworn in at noon, taking a slice out of the Democratic majority and removing lame-duck lawmakers willing to support the tax before leaving office.

The increase now goes to Democratic Gov. Pat Quinn, who supports the plan to temporarily raise the personal tax rate to 5 percent, a two-thirds increase from the current 3 percent rate. Corporate taxes also would climb as part of the effort to close a budget hole that could hit $15 billion this year.

"Governor Quinn today thanks the Illinois General Assembly for taking strong action to confront our fiscal crisis and provide the revenue and reforms needed to stabilize the budget, pay our bills and jumpstart Illinois' economy," a statement from his office said.

Quinn's office said the higher taxes will generate about $6.8 billion a year — a major increase by any measure. In percentage terms, 66 percent might be the biggest increase any state has adopted while grappling with recent economic woes.

It will be coupled with strict 2 percent limits on spending growth. 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.

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, 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."

The increase means an Illinois resident who now owes $1,000 in state income taxes will pay $1,666 at the new rate. After four years, the rate drops to 4 percent and that same taxpayer will then owe $1,333.

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.

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.

The governor has refused to discuss the tax proposal publicly, although his aides say he supports it. During his election campaign, Quinn promised to veto any tax plan higher than his proposal for a 1-point increase.

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.

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're really trying to handcuff ourselves and the governor in our spending," said Illinois Senate President John Cullerton, a Chicago Democrat.

http://www.moneynews.com/StreetTalk/Ill ... /id/382587

Well Hey..... you dumbed down citizens of Illinois need to cough of the cash to pay for those Illegal Aliens One way or another

As taxpayers mourn, Quinn and IL Democrats give each other high fives

January 12, 2011

IL governor congratulates lawmakers for raising state income tax 66%

Rick Moran
29 Comments

Illinois Democrats passed a whopping 66% increase in state income taxes in a lame duck session. Governor Pat Quinn congratulated his party members: http://newsblogs.chicagotribune.com/clo ... rease.html

"A lot of them are my friends and we worked together in campaigns and we believe in working together in important things that help children," Quinn said when reporters caught up to him after the Senate vote.
Asked if there was a lot of horse trading to win support, Quinn said "not really. Everybody voted their conscience."

They also increased business taxes 46% in a state where the tax base has been disappearing for a decade.

Not a single Republican voted for the measure - even those who were retiring or defeated in the November election.

And this is cause for congratulations and celebration? In the cloud cuckoo land of Democratic politics in Illinois, you betcha.

And don't let anyone tell you that this is for "deficit reduction." In order to get the support of black lawmakers, Quinn promised to spend a billion dollars over the next 4 years on schools. No doubt other uses will be found for all that cash besides solving the state's massive fiscal crisis.

What's needed in Illinois is an intervention. Some addiction expert should sit down with these clowns and gently point out that in the midst of a crisis where the state can't pay its bills and some merchants have waited a year for the state to make good on its purchases, you don't go and spend a billion dollars even on a worthy cause like "the children." By this time next year, it will be back to business as usual in Springfield - except the taxpayers will be poorer and businesses will be scarcer.

http://www.americanthinker.com/blog/201 ... _lawm.html

January 12, 2011

Quinn congratulates Democrats on income tax increase

by Ray Long and Monique Garcia at 2:15 a.m.

A triumphant Gov. Pat Quinn congratulated fellow Democrats early today after the Illinois Senate and House sent him a major income tax increase without a single Republican vote in favor.

Quinn smiled and shook hands on the floor of the Senate around 1:30 a.m. after the Senate voted 30-29 for the bill, which would raise the personal income tax-rate by 67 percent and the business income tax rate by 46 percent.

The House passed the bill hours earlier Tuesday night -- likewise without a vote to spare and with nary a Republican in support.

The plan nearly faltered in the Senate when black lawmakers balked at the House’s decision to remove a property-tax relief component from the plan and failure to approve a cigarette tax hike for schools. But Quinn met privately with members of the Senate black caucus, who said he pledged to pump $250 million from the income tax increase into schools for each of the next four years.

"A lot of them are my friends and we worked together in campaigns and we believe in working together in important things that help children," Quinn said when reporters caught up to him after the Senate vote.

Asked if there was a lot of horse trading to win support, Quinn said "not really. Everybody voted their conscience."

Quinn deferred most questions until a news conference scheduled for 10:30 a.m., just hours before lawmakers elected in November were to be sworn in as the General Assembly starts a new session. Democrats relied on the votes of some lame-duck lawmakers to push through the tax increase.

"We were happy that the Senate voted that way and the House did too, and we'll talk about it tomorrow," Quinn said, forgetting that he meant a little later today.

Democrats argued the tax increase was needed to rehabilitate the state’s deadbeat image, but Republicans predicted it would drive businesses out of state.

“We have just come through the worst economic crisis in our lifetime…and we have not paid our bills,â€