|
 Quinn, who is facing a tough re-election campaign against wealthy
Republican venture capitalist Bruce Rauner, sought to soften the
move to lock in the higher tax rate by also offering a property tax
refund to homeowners and increasing the earned income tax credit for
low-income workers.
"This comprehensive tax reform plan would maintain current income
tax rates, allowing us to balance the budget, properly invest in
education, and provide every Illinois homeowner with a guaranteed
$500 property tax refund every year," the Democratic governor said
in his budget address to the state legislature.
The tax increase, which took effect after Quinn signed the 67
percent hike in the personal income tax rate into law in 2011, is
set to expire partially on Jan. 1, 2015, the halfway point of the
state's upcoming fiscal year. Under the law, the rate is scheduled
to drop from 5 percent to 3.75 percent, while a corporate tax rate
increase will also fall to 5.25 percent from 7 percent.
Rauner released a statement blasting his opponent for backtracking
on an earlier commitment to allow the tax hike to roll back.
"After five years of Pat Quinn's failed leadership, we have record
tax hikes, outrageously high unemployment, massive cuts in
education, and there's still a giant budget mess in Springfield," he
said in the statement.
House Speaker Michael Madigan, a powerful Chicago Democrat, told
Illinois Public Television that the governor showed political
courage and that he will push for Quinn's tax proposal during the
legislature's spring session, which ends May 31. He added that
lawmakers have an opportunity to "improve" the state's overall tax
code.
Madigan last week unveiled a proposed constitutional amendment that
would subject millionaires in the state to a 3 percent income tax
surcharge in an effort to raise $1 billion a year for schools. The
move was seen by political observers as an effort to help Quinn's
re-election campaign.
Quinn, in his speech, said he opposed taxing services and retirement
income, but did not address Madigan's millionaires' tax plan.
Senate President and Chicago Democrat John Cullerton also threw his
support behind making the tax hike permanent, adding that "draconian
budget cuts to vital programs" would be unacceptable.
"In order to stay on this path of fiscal stability, we have to
maintain the same level of revenue," he said in a statement.
The hikes in the state's personal and corporate tax rates have
raised between $7.5 billion and nearly $8 billion a year, according
to an August report by a legislative commission.
[to top of second column] |
Republican legislative leaders took issue with the argument made by
Quinn and other Democrats that funding for education and other vital
problems would be drastically cut if the tax hike were to expire.
"The governor said time and time again that we are going to have all
these cuts," Senate Republican Leader Christine Radogno told
reporters. "They don't have to happen. There is significant wiggle
room built into the numbers that they are portraying."
Quinn unveiled a $65.9 billion all-funds budget that includes $38.57
billion in general fund spending for the fiscal year that begins
July 1, according to budget documents. The governor also released a
five-year budget blueprint that forecasts a general funds surplus
that would reach $757 million in fiscal 2019 and a decline in an
unpaid bill backlog from $4.8 billion in fiscal 2014 to about $2.2
billion in fiscal 2019.
Wall Street credit ratings agencies, which have slapped Illinois
with the lowest ratings among U.S. states, have been focusing on the
partially expiring tax hikes and the impact of the lost revenue on
the state's shaky financial position.
"It's obviously something that affects our view of the credit," said
Moody's Investors Service analyst Ted Hampton. He added that while
it was noteworthy that Quinn came out in favor of keeping the tax
rate hike, it remains to be seen how and when the legislature may
act.
Rating agencies welcomed the enactment in December of comprehensive
pension reforms aimed at easing Illinois' estimated $100 billion
pension funding shortfall. But they also are awaiting the outcome of
five lawsuits challenging the constitutionality of the reforms.
(Reporting by Karl Plume in Springfield;
additional reporting by
Karen Pierog in Chicago; editing by James Dalgleish, David Greising;
G. Crosse and Dan Grebler)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
