Illinois residents would continue paying a 5-percent income tax rate under the much-anticipated budget proposal Gov. Pat Quinn presented Wednesday.
Illinois' income tax rate is supposed to expire in January, midway through the fiscal year. But Quinn says that would cause "savage cuts" to schools and other critical state services. Instead, the governor wants to make the higher income tax rate permanent.
"I propose that we take the path that is honest and responsible. 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 emergencies," Quinn told lawmakers on Wednesday.
In an attempt to ease taxpayer's pain, Quinn also wants to give homeowners a $500 property tax credit.
The governor's plan is getting early signals of support from the General Assembly's leading Democrats.
Illinois Senate President John Cullerton, D-Chicago, agrees with Quinn on extending what was supposed to be the temporary income tax increase. Cullerton said after Quinn's budget speech that 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."
If the income tax expired in 2015 it would cut a $1.6 billion hole in the budget. He says it would be unacceptable to allow draconian cuts in state services — including education.
But Republicans — including the man who's trying to take over the governor's mansion, GOP gubernatorial nominee Bruce Rauner — say Illinois' budget can be balanced without the higher taxes. Rauner hasn't given any specifics, however.
Kane County Republican Sen. Karen McConnaughay said Quinn's plan to keep the higher income tax is a Democratic pattern.
"You've got the governor extending the income tax. You've got Mike Madigan with the millionaire tax. And you've got Senate Democrats who have introduced a progressive income tax. I mean, taxation is their way of solving all problems in Illinois," McConnaughay said. Republican leaders in the Illinois Legislature say Quinn and his fellow Democrats can't be trusted with taxpayers' money.
State Rep. Jim Durkin of Burr Ridge, and state Sen. Christine Radogno of Lemont, Republican leaders in the legislature, said that Quinn and his fellow Democrats can't be trusted with taxpayers' money.
Durkin and Radogno say Democrats approved the tax increase — from 3 percent to 5 percent for individuals — in 2011 as a way to pay the state's overdue bills. But Illinois still has a bill backlog of about $6 billion. Durkin said Democrats lied.