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Quinn pitches flat $500 property tax credit, not income tax drop

SPRINGFIELD - Gov. Pat Quinn Wednesday asked lawmakers who face tough re-election campaigns months from now to pick higher income taxes and a property tax break over steep cuts to state programs.

Quinn's plan, set forth in his annual budget address, would stop the state's 5 percent income tax rate from rolling back to 3.75 percent at the end of the year, a provision Democrats included when they approved the income tax hike in 2011 and branded it temporary.

Quinn's budget proposal includes a flat $500 property tax credit to homeowners, perhaps making the plan more palatable to some lawmakers. It would replace a different tax credit and would add money to the wallets of those paying less than $10,000 a year in property taxes while decreasing the credit for those paying more than $10,000.

Keeping the 5 percent income tax rate won early backing from Democratic leaders House Speaker Michael Madigan and Senate President John Cullerton, all but assuring it will be part of the budget debate as lawmakers race toward their May 31 deadline.

But even before Quinn took the podium in the Illinois House, suburban Democrats whose support the governor needs to win approval for his agenda were pushing back.

"I'm not in favor of that tax rate staying," said state Sen. Tom Cullerton, a Villa Park Democrat.

Quinn's budget would also include a significant boost to a key tax break for the working poor and create a panel tasked with coming up with a solution for Illinois' roads and bridges needs.

His speech laid out his vision of the budgetary disasters that could await Illinois if the tax hike rolls back and the state loses more than $1.5 billion in revenue next year as a result.

"If action is not taken to stabilize our revenue code, extreme and radical cuts will be imposed on education and critical public services," Quinn said.

Republicans oppose Quinn, as expected, and state Sen. Matt Murphy, a Palatine Republican, said a $500 tax break wouldn't be enough to justify higher income taxes.

"This is a smoke screen trying to distract from the fact that he broke his promise that it would be a temporary tax increase," Murphy said.

But given Republicans' likely opposition to Quinn no matter what, it's Democrats he'll have to win over. State Rep. Marty Moylan, a Des Plaines Democrat, said he'd look at the property tax break some more given that lawmakers, their staffs and reporters didn't get a detailed preview of the governor's complex plan before the speech.

Still, Moylan said, he's almost certain to oppose extending the 2011 tax hike.

"I think we're going to need some difficult cuts across the board," said Moylan, who's expected to have one of the most hotly contested re-election campaigns in Illinois.

Quinn had backers in the suburbs, too.

State Sen. Julie Morrison, a Deerfield Democrat, said the property tax break would be helpful in her district and the state can't absorb $1.5 billion in lost revenue.

"I think it's obvious that something has to happen," she said.

State Sen. Pamela Althoff criticized Quinn for putting off his budget address for more than a month, until after last week's primary election.

"This is a man who needed extra weeks to prepare," the McHenry Republican said. "I'm offended."

Quinn's proposal in total was a $36.8 billion plan that includes more than $300 million extra for education as long as lawmakers make the temporary income tax increase permanent.

Quinn faces re-election in what's likely to be one of the fiercest campaigns nationwide with a challenge from Republican businessman Bruce Rauner.

None of the options for approaching Illinois' financial future - from extending the increase to letting it sunset or approving a new tax on millionaires - will be politically easy or resolve all the issues.

Illinois still has a backlog of billions in unpaid bills, the nation's lowest credit rating and uncertainty with its pension debt.

• The Associated Press contributed to this story.

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