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updated: 1/12/2011 2:12 PM

Quinn reneges on vow to veto 5% tax

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  • Rep. Dan Brady, R-Bloomington, right, and Illinois Rep. Roger Eddy, R-Hutsonville, left, confer while on the House floor during session Tuesday.

      Rep. Dan Brady, R-Bloomington, right, and Illinois Rep. Roger Eddy, R-Hutsonville, left, confer while on the House floor during session Tuesday.
    Associated Press

  • How much the tax hike would cost you

    Graphic: How much the tax hike would cost you

 
 

SPRINGFIELD -- Gov. Pat Quinn says he'll sign into law a 66 percent tax hike approved today by lawmakers, even though it is contrary to repeated statements he made on the campaign trail this year.

Quinn stated at numerous debates and public appearances that he would push a "1 percent surcharge" to fund education and only that. A year earlier, he had pitched a 1.5 percentage point increase, but that plan, which at the time was met with harsh criticism, was replaced.

At a July 29 news conference, Quinn denied a published report claiming he planned to raise the state's income tax by 2 percentage points.

A 1 percent increase, Quinn said then, "is all that I propose and all that I support," an audibly irritated Quinn said. "I'm going to veto anything that's not my plan."

However, as months have passed, the state's financial situation has only gotten more precarious, with piles of unpaid bills to schools and social service agencies.

Quinn cites the state's "fiscal emergency" as reason to support a larger increase than he originally outlined. He noted at a news conference early today that he was not being untrue to campaign promises.

"It's important for state government not to be a basket case," he said, saying "Our fiscal house is burning."

With the governor's signature, the law will raise the state income tax rate from 3 percent to 5 percent for the next four years. The rate for businesses would increase from 4.8 percent to 7 percent, also temporarily.

Quinn thanked lawmakers for approving the tax increase, and he shot back at the governors of Wisconsin and Indiana, who had taunted Quinn and Illinois Democrats in recent days over raising taxes and perhaps pushing businesses to their states.

"We don't have to scrape to any other state," he said.

All the same, taxpayers aren't happy today about the news that they'll soon be paying 66 percent more in Illinois income taxes.

Several suburban residents interviewed early Wednesday said the term "temporary" will eventually become permanent.'

"It'll never come back," said Wheaton resident Dan Simmet. "I think the tax is appropriate because the state is broke. But they originally said state taxes would only be temporary and here we are, 40 some years later, still paying them."

The proposal approved by lawmakers is intended to pull the state from the brink of financial collapse, which some argue started years ago.

"We are going to be in very dire straits if we don't do something," said Rep. Elaine Nekritz, a Northbrook Democrat who advocated for a number of spending reforms before voting for the tax hike.

The trade-off would be that millions of Illinoisans, many of whom face employment uncertainty and years of working without raises and pay reductions, could see their paychecks decrease once employers make changes to their withholdings.

Businesses with tight budget, Republicans warned, could stop hiring or leave Illinois.

"This is the nuclear bomb of jobs bills," said Sen. Dan Duffy, a Lake Barrington Republican.

The House voted 60-57 to approve the plan, and the Senate followed suit by a 30-29 vote, meaning both chambers had just the minimum number of votes needed for approval.

"We're going to pay our bills," said Sen. Dan Kotowski, a Park Ridge Democrat. "We're doing to educate our children."

But a plan to borrow nearly $9 billion to pay down the state's still-growing piles of unpaid bills was rejected twice by the House and remains in limbo for the immediate future. A smaller borrowing plan to take about $4 billion in loans and pay for public workers' retirement was approved by the Senate and sent to Quinn.

Even though Republicans were the loudest critics of the taxes and borrowing plans, some Democrats objected as well.

Even though lawmakers last year made cuts to the state pension system and in recent days made steps to reform medical care for the poor, some wanted to see even more cuts before taxes were raised.

"Since I first got here people have been talking about reforms and after four years I've learned what reforms means in the state of Illinois -- nothing," said Rep. Fred Crespo, a Hoffman Estates Democrat.

The debate over taxes follows a bitterly contested election where candidates of both parties campaigned against the idea of reaching into taxpayers' wallets. Republicans argued that their success in November was a sign that people wanted a rebuke of tax increases.

Supporters, though, said the state's billions of dollars of payments it owes to local schools, doctors, and caregivers of the homeless, elderly and disabled was the key reason why Illinois needs more tax revenue.

"When would we run out of money?" Rep. Linda Chapa LaVia, an Aurora Democrat, asked during a hearing Tuesday.

"Some would argue we already have run out of money," replied David Vaught, Quinn's budget director.

The plan comes with a 2 percent yearly cap on future spending. If lawmakers spend more than law allows in future years, the tax increase would be nullified. As it is, the income tax rate would drop to 3.75 percent for people after four years.

"This is not a game, not a trick. This is a real spending cap," said Senate President John Cullerton, a Chicago Democrat. "We're really trying to handcuff ourselves, and the governor, in our spending."

Republicans said, though, the cap merely ensures lawmakers will continue to spend 2 percent more a year instead of cutting spending back. And House Republican Leader Tom Cross said he doesn't think the income tax will remain temporary.

"I think it's clearly false," he said.

The debate in both the House and Senate was heated. The Senate debate lasted past 1 a.m. Wednesday and paused for more than 15 minutes when Rep. David Miller, who was observing the debate collapsed on the Senate floor.

Miller, a Democrat from Lynwood who most recently lost a bid for Illinois comptroller, was taken from the floor on a stretcher.

Victoria Livorsi of Fox Lake said she also worries about the effect the corporate tax rate increase would have on businesses,

"It's going to definitely have a bad effect on our recovery from the recession because they raised taxes, while also pushed jobs and corporations out," she said. "I understand the money needs to come from somewhere because we all use state services, but they should have cut more state services to lessen the burden on taxpayers."

Earlier in the day, Democrats pulled a plan aimed at helping people pay their property taxes that instead would have cost many suburban homeowners more. Suburban lawmakers had objected loudly to the provision.

Meanwhile, the House rejected a $1-per-pack cigarette tax hike that was estimated to raise about $375 million a year, much of which would have been tapped to pay for schools.

Cross said Tuesday evening that even if the tax increase plan was approved, the new lawmakers to be sworn in Wednesday would work hard to change it somehow.

"I think you're going to see a pretty aggressive group of folks get sworn in tomorrow," Cross said.

• Daily Herald staff writers Lee Filas and Jeff Engelhardt contributed to this report.

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