 But it will take a 75 percent hike in income taxes and billions more
in state borrowing to make it all happen.Illinois Senate
President John Cullerton, D-Chicago, announced the deal late
Thursday. A vote on the measure is pending.
Under the provisions, Illinois taxpayers will see their income
tax rate jump from 3 percent to 5.25 percent. The corporate tax rate
would climb to 8.4 percent.
Cullerton estimates that the personal income tax increase will
bring in $6.2 billion to the state. He put the price tag for the
corporate tax hike at $1 billion a year.
The deal also includes just over $12 billion in borrowing.
Cullerton said $3.7 billion of that borrowed money will go to pay
this year's pension obligations. The rest will go toward Illinois'
mountain of unpaid bills.
"People would get paid money that is owed to them. It'll help the
economy when we infuse that much money back into the economy and pay
those bills off," said Cullerton.
Illinois owes about $5.2 billion in unpaid bills dating back to
the summer. The tax and borrowing plan would pay those bills by the
end of March.
There is also money earmarked for schools. Cullerton said a
quarter of 1 percent of the total income tax hike will be set aside
for property tax relief and education funding. Another $377 million
for schools would come from a to-be-voted-on cigarette tax increase,
which would add a dollar-per-pack tax to the price.
House Democrats, particularly members of the Black Caucus, were
demanding at least some new money for schools. State Rep. Will
Davis, D-East Hazel Crest, said now that top Democrats have come to
terms on the details, a vote could come as early as Sunday.
"Right now our goal is 60 votes," Davis said. "We hope it's
bipartisan, which means (Republicans) support trying to put more
money in education and human services. But at this point we're
looking for 60 votes."
Republicans say all the votes likely will have to come from
Democrats. State Sen. Dave Syverson, R-Rockford, said he doesn't see
how any GOP lawmakers can vote for a 75 percent income tax increase
in this economy.
"We're getting ready to pass a record tax increase, but the new
governor of Wisconsin is talking about cutting taxes there to
stimulate his state's economy," Syverson said.
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Syverson is also worried about an increase in corporate tax rates
and the dollar-per-pack bump in the price of cigarettes.
"Any border community has to be worried about that. It'll
devastate Rockford and could hurt a lot of other communities as
well," he said.
A number of expiration dates are to be built into the
legislation. All but 0.25 percent of the personal income tax
increase is set to expire in four years. Future lawmakers would have
to decide if they want to make it permanent. The pension borrowing
component is to be paid back over the next eight years. Borrowing
for the past-due bills is on a 14-year repayment plan.
The income tax increase would be based on 2011 incomes, back to
Jan. 1, according to Cullerton. But he is quick to say that
homeowners will get a property tax credit this year and property tax
rebate checks of $325 starting in 2012.
Cullerton said the tax increase and borrowing plan of 2011 should
settle Illinois' budgets until at least 2014.
"Eight billion dollars will go back into the economy; people will
be paid on time," he said. "Our credit rating will be dramatically
improved. We will then have a balanced budget with virtually no
growth for the next four years."
A few tweaks could come between now and when the Illinois House
is expected to vote on the tax increase this weekend. Lawmakers will
have to vote quickly, as a new General Assembly will be sworn in
Wednesday.
[Illinois
Statehouse News; By BENJAMIN YOUNT]
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