Higher taxes, fees in plan to balance Ill. budget

SPRINGFIELD -- Smokers, drivers and many Illinois workers would be asked to pony up more money to balance the state budget under a plan being considered by Gov. Pat Quinn.

A "blueprint" of the budget provided to some Illinois lawmakers shows Quinn also may try to close several tax loopholes, dip into special-purpose funds and keep money that would usually go to local government.

The outline, obtained Tuesday by The Associated Press, suggested Quinn had not settled on the size of the income tax increase he will propose. The document says the personal income tax, now 3 percent, could climb to 3.5 percent or even 4.5 percent.

Quinn acknowledges he'll propose higher taxes but says he also would raise the personal exemption, shielding more income from taxation. That means many families' taxes actually would go down, he says.

The budget blueprint, first reported by the Chicago Sun-Times, shows Quinn is considering a $1 increase in the cigarette tax, which is now 98 cents a pack. The increase would be phased in over two years.

He also is targeting the cost of license plates and drivers licenses.

Plates, which will cost $79 starting this summer, would jump to $99 under the plan being considered by Quinn. A drivers license, which now costs $10 and is good for four years, would cost $20.

Those higher fees would generate about $200 million a year, which would be used to finance a statewide construction program to repair roads, bridges and other infrastructure.

The Democratic governor will reveal his budget proposal Wednesday in a speech to the General Assembly. He faces the dilemma of trying to fill a deficit that could reach $11.5 billion next year if no action is taken.

Normally, local governments would get a share of any income tax increase. Quinn's plan would keep all the additional money for the state, meaning cities would miss out on $287 million.

Quinn also may take $200 million out of a variety of government funds that are supported by special fees and dedicated to particular programs. Such diversions were common under his predecessor, Rod Blagojevich, who was removed from office in January.

The budget blueprint includes another idea favored by Blagojevich: ending several tax breaks for businesses. The move would save the state about $100 million but lawmakers have rejected the idea in past years.

The blueprint calls for raising the corporate income tax rate to 5.9 percent, up from 4.8 percent. That would yield $175 million for the state.