Illinois residents would continue paying a 5-percent income tax rate under the much-anticipated budget proposal Governor Pat Quinn has presented. Illinois' income tax rate is supposed to revert to three and three quarters percent in January, midway through the fiscal year. Gov. Quinn says that would cause "savage cuts" to schools and other critical state services. Instead, Quinn wants to make the higher income tax rate permanent and take what he calls a responsible path.
"The path that protects everyday families and invests in their future, the honest path that includes some additional hard steps, but leads us out of the era of budget emergency."
Quinn says since he took office the budget has been cut by over $5.7 billion.
"If action is not taken to stabilize our revenue code, extreme and radical cuts will be imposed on education and critical public services."
"We cannot stand by and allow savage cuts to our education and to these critical services to unravel the progress that we have made over the last five years."
State Representative Dan Brady of Bloomington Normal says the poor fiscal situation took more than 14 years to get into and it will take more time to get out of it. Brady says Quinn is wrong if he thinks no more reductions are possible.
"We have so many tentacles in state government and so many other areas which have come to depend on state government. When you go to make the cuts to those tentacles you hear it from constituents, you hear it from programs, and you hear from agencies. It's very difficult. But, it's going to need to continue before you can say we we have truly done everything."
Brady says there are plenty of ideas out there.
I had a proposal to cut the State Board of Ed completely, to cut it out. Over $27 million would be an infusion into the state budget. But, there are those who, oh we can't function without the state Board. I happen to think we can with Regional Superintendents of Schools."
Without legislative action, the state’s personal income tax rate will drop next year - from 5 percent to 3-point-7-5 percent. Quinn’s administration says that would cost the state more than 2-billion dollars in revenue. GOP State Senator Karen McConnaughay says she also doesn't believe all of the administration's revenue projections.
"I find it very hard to trust the Governor and it pains me to have to say that. But, there's a lot of budget gimmicks going on here."
Republicans also point out Quinn is breaking a promise to keep the tax hike temporary. In an attempt to ease taxpayer pain. Dan Brady.
"Someone's always going to squeal when you step on their tail. But, still you have to make those difficult decisions. And when you have a temporary income tax that has been there since 2011 and was sold on the very premise that it's gonna be temporary and it's going to help us out of some of the debt problems that we have and it's going to pay down our bills; well, it hasn't."
Quinn also wants to give homeowners a $500 property tax credit, which would cost roughly $700 million. The governor's plan is getting early signals of support from the General Assembly's leading Democrats. Illinois House Speaker Michael Madigan says he plans to call a vote on making the state's tax increase permanent. Madigan is chairman of the state Democratic party and has served as speaker for nearly 30 years. Madigan says he supports Quinn's plan and commends the governor for his "political courage" in asking for the extended tax increase. He says the Legislature will "resolve" the issue this spring. The Illinois Senate president also agrees with Quinn on extending what was supposed to be a temporary income tax increase. Chicago Democrat John Cullerton says the state used the income tax increase from 2011 to pay down $3 billion in back-due bills and fully fund large pension payments. But Cullerton says the state must maintain the same level of revenue in order to ``stay on this path of fiscal stability.''
GOP State Senator Karen McConnaughay says it is no accident a recent survey shows Illinoisians do not want the tax extended.
"They have been made an awful lot of promises. They have watched other states come out of this recession and prosper begin to grow their jobs and their economy. And yet it's still stagnant here in Illinois."
Neither side appears willing to address analysis that shows both budget cuts and retaining the income tax are necessary. Back in October a report from the University of Illinois' Institute of Government and Public Affairs, indicated that based on historical patterns, expenditures will grow faster than revenues and the state will move into deficit even with the income tax in place. The Institute says if the tax goes away, deficits could rise to about $8 billion per year.
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