Tuesday, March 24, 2009
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Bomke highlights governor's proposed tax increases

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[March 24, 2009]  SPRINGFIELD -- Illinois lawmakers got their first look at Gov. Pat Quinn's $53 billion budget proposal during the week -- a plan consisting of tax hikes, changes and raids to the state pension system, and increased state spending.

HardwareState Sen. Larry Bomke, R-Springfield, said the primary component of the governor's plan consisted of a 50 percent increase in state income taxes. The $3 billion tax hike, if passed, would be the largest tax increase in Illinois history -- three times larger than any other major tax increase ever approved.

Under the Quinn plan, individuals would see their personal income taxes rise from 3 percent to 4.5 percent, while the corporate income tax rate would increase from 4.8 percent to 7.2 percent. Although the governor increased the personal exemption on income taxes to $6,000, most Illinois taxpayers would see a tax increase -- single taxpayers making more than $16,000 annually and families of four with annual household incomes exceeding $61,000.

Illinois residents interested in seeing how they would fare under the Quinn plan can visit http://budget.illinois.gov/taxcalculator.htm to calculate how their tax bill would be affected.


In addition to income tax increases, the governor proposed several other tax and fee hikes for the upcoming fiscal year. State employers would face $287 million in additional costs through the removal of various tax credits aimed at fostering economic development. Bomke expressed concern that the move would further weaken the struggling Illinois economy, which lost 175,000 jobs last year and ranks 46th nationally in terms of job growth.

Smokers and drivers would also see higher taxes under the Quinn plan. The tax on cigarettes would increase $1 per pack; motor vehicle fees would jump from $79 to $99; and driver's license fees would double from $10 to $20.

Changes to the state pension system are another highlight of the governor's plan. To help free up money for the budget, Quinn proposed a $3.2 billion raid of the pension system, the biggest shorting of pension funds ever. He is also seeking the creation of a "two-tiered" pension system, with one set of benefits for current members and less-generous benefits for new members.

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Quinn's plan raises the retirement age for newly hired teachers and state employees from 62 to 67 and reduces benefit formulas for new state hires. Meanwhile, current teachers and state employees would have to contribute more, with an additional 2 percent of their salary going to the pension system.

Noting that new state spending has increased by $7 billion during the last six years, Bomke expressed disappointment that more emphasis wasn't placed on spending cuts in the governor's fiscal 2010 proposal, which actually increases general revenue fund spending by $628 million compared with fiscal 2009. Programs imposed by former Gov. Rod Blagojevich, such as subsidized health care coverage for families making up to $80,000, were largely left untouched.

A final pillar of the governor's plan was a new $26 billion capital construction program to update and expand Illinois' infrastructure, including roads, bridges, highways, schools and mass transit networks. It has been a decade since Illinois last had a capital program.

[Text from file sent on behalf of Sen. Larry Bomke by Illinois Senate Republican staff]

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