Extension of income tax hike may be key 2014 theme

The crux of Gov. Pat Quinn's plan to prevent big budget cuts is making permanent an income tax increase, which he acknowledges isn't palatable for many Illinoisans. And the move is even riskier in an election year as his Republican challenger, Bruce Rauner, has blasted the idea in hopes of appealing to tax-weary voters.

Quinn's proposal to extend the 2011 tax hike, which is scheduled to roll back in January and create a $1.6 billion revenue hole, has become a focal point of the November contest and comes as Illinois already is grappling with billions of dollars in unpaid bills, the lowest credit rating nationwide and uncertainty over a plan to deal with pension debt. However, there are signs the trade off - a tax extension to ward off cuts to schools and services - could work in Quinn's favor. Top Democrats back him, unions like the proposal and the payoff from an ancillary plan tied to property tax refunds could soften the blow just in time.

"You need to lay out a specific and concrete and responsible and honest plan. That's what I did ...," Quinn said while visiting a Chicago elementary school Thursday, the day after he proposed the extension in his budget speech. "That's the only way to go, to tell the people of Illinois what we all need to know."

The Chicago Democrat, seeking a second full term, says maintaining the tax increase will ensure school funding. His proposed $36.8 billion spending plan includes about $100 million more for early education.

But the idea of more spending and Quinn's proposal angers Republican lawmakers and many voters.

Retiree Gary Ledford, of southern Illinois' Godfrey, doesn't want the tax increase to be extended. A Republican, Ledford voted for state Sen. Kirk Dillard in last week's gubernatorial primary but said he likes Rauner's opposition to Quinn's tax plan.

"I don't believe they should do it," he said of the tax hike extension. "The more they get, the more they spend."

Cutting spending has been one of Rauner's key themes, along with ending the tenure of career politicians and curbing the influence of "government union bosses." His campaign quickly released ads blasting Quinn's plan as a broken promise, since the roughly 67 percent tax increase lawmakers approved in three years ago was billed as temporary. A Rauner campaign staffer wearing a long fake nose and calling himself "Quinnocchio" even picketed outside Quinn's school stop Thursday.

Still, Quinn immediately won strong support of top Democrats, who control the House and Senate. House Speaker Michael Madigan praised Quinn for showing "political courage."

The governor could also see a boost from unions, which back the tax hike extension and have vowed to keep Rauner from winning office.

Service Employees International Union in Illinois, which represents roughly 170,000 health care, janitorial and other industry workers, endorsed Quinn earlier this week saying he represented concerns of working people.

George White, who works at a Chicago nursing home's kitchen, said he doesn't want to see cuts to schools or care for the elderly. The 59-year-old public employee sits on the board of SEIU and said extending the tax increase would mean better equipment at his job and a brighter future for his family.

"I've got grandkids and I've got a great-grandkid in school," he said. "They will be tremendously helped."

Campaigning on a tax extension - and winning - is not unprecedented.

Though the circumstances were different, former Republican Gov. Jim Edgar pushed to extend a temporary increase in the early 1990s and won over then-Illinois Attorney General Neil Hartigan, a Democrat who ran an anti-tax campaign. Quinn even praised Edgar in his budget speech for a later tax plan.

Edgar said it could work in Quinn's favor to be up front with voters ahead of November about the tax, instead of approving an extension after the election. Still, Quinn will have to demonstrate he's willing to be fiscally responsible in other areas, Edgar said.

"Governmentally, it's the right thing," Edgar said. "Politically, it will be a tough sell. You've got to show that you'll be tight with the buck as you can."

Quinn may have another edge before the election. His budget proposal includes giving each Illinois homeowner a $500 annual refund, regardless of home value. If the idea is implemented as planned, state officials say, the checks could arrive ahead of the election.

Either way, it will be a challenge for Quinn as the tax issue might be a deciding factor for some voters.

A poll this week by the Paul Simon Public Policy Institute at Southern Illinois University showed more than half of Illinois voters prefer cutting existing spending over approving new revenue, though about 28 percent said it should be a combination of the two. The survey interviewed 1,001 registered voters by phone from Feb. 12-25. The margin of error was plus or minus 3.5 percentage points.

"It's always difficult to move public opinion in mass," said Jonathan Jackson, who helped direct the SIU poll. "The governor has a real fight on his hands to move public opinion at least somewhat in his direction."