Blagojevich tax hike plan gets huge rejection in IL House | St. Louis Public Radio

Blagojevich tax hike plan gets huge rejection in IL House

Springfield, Ill. – Even after lawmakers overwhelmingly rejected his proposal for a major new tax, mocking his attempt to put a positive face on the rejection, and further talking of dumping a huge health care program that he's made a priority, Gov. Rod Blagojevich still declared Thursday a good day.

"There's ups and downs, but (I) feel good about it," Blagojevich said after an appearance in Chicago. "Things went pretty well today."

In a test vote meant to reveal whether his $7.6 billion tax on business transactions had any support, not a single lawmaker backed the proposal; 107 opposed it.

Blagojevich sought to minimize the vote's impact. Beforehand, he suddenly asked lawmakers to vote against his plan as a signal that they think it's too soon to take a firm position.

Lawmakers of both parties scoffed, calling the request an attempt to put a positive spin on what would otherwise have been a clear-cut defeat. Only one lawmaker, a close ally of Blagojevich, suggested the vote was not a referendum on the tax itself.

Republicans displayed signs saying "'No means no,' governor!"

And Rep. Marlow Colvin, a Chicago Democrat and chairman of the House's black caucus, said Blagojevich was disguising the fact that his plan probably wouldn't have gotten 20 votes.

"Rather than facing that embarrassing defeat, they spun it to say this is an ongoing debate and discussion," Colvin said. "To their credit, I think it's the first smart move they've made."

The complete rejection left lawmakers wondering where else they could find money for schools, health care, transportation and the state's many other needs.

Raising income and sales taxes are two options, although Blagojevich has promised to fight them relentlessly. Expanding gambling and cracking down on companies that avoid paying income taxes are other options mentioned by lawmakers.

Another possibility is passing a budget that holds spending at current levels, which would mean no expansion of health insurance programs.

House Speaker Michael Madigan (D-Chicago) for the first time took a clear public position against Blagojevich's proposed gross receipts tax, which would be the largest in Illinois history.

He said it is regressive and would hurt poor people who are "the least able in our society to take on additional costs."

The tax would apply to business transactions. Basically, every time a company took in money, it would pay a small share to the state.

Companies with under $2 million in annual revenues would be exempt. The first $5 million in revenues for larger companies would not be taxed. Blagojevich's office says the result is that 90% of Illinois businesses would pay nothing under the new tax.

Blagojevich wants the money, along with $1 billion from a new payroll tax, to pay for programs that would ensure everyone in Illinois has access to health insurance. It also would provide more money for schools and $1 billion in local property tax relief.

Business groups predict it would force them to raise prices or cut jobs. Some advocates for the poor argue it would be a bigger burden on the needy than the rich. Lawmakers are nervous about supporting such a large increase.

The Illinois House heard eight hours of testimony on the gross receipts tax Wednesday, including a personal pitch from the governor. Blagojevich spokeswoman Abby Ottenhoff said the hearing produced good questions and suggestions, so a test vote shouldn't have been taken until the administration had time to respond.

Madigan said he would meet with House Democrats next week to consider other revenue possibilities. He would not answer reporters' questions after the debate.

Rep. Frank Mautino (D-Spring Valley) said he expects Madigan's staff to lay out the state's many expenses and the size of the tax increases that would be needed to pay them. Then Democrats will attempt to reach some consensus on what they support.

Mautino said he sees general support for an income tax increase, even if it means a battle with Blagojevich, so long as the money is used for schools and other long-standing needs.

"I do believe the will is out there to increase taxes. I just don't believe it's there to create new programs with that money," Mautino said.

But Blagojevich says he is committed to creating a major new health program. The Chicago Democrat is unlikely to take the House vote as the last word. And he renewed his vow to veto any income or sales tax increase.

"We're not going to raise taxes on people on top of high gas prices and on top of electric bills that people can't afford to pay," he said.

Senate President Emil Jones (D-Chicago) also backs the gross receipts tax, although his chief priority is education funding, not health care. After the House vote, Senate Republicans called on Jones to conduct a vote in the upper chamber so the tax could be defeated once and for all.

He ignored the request and challenged Republicans to spell out what tax proposals they'd be willing to support. He later told reporters he doesn't consider the tax dead yet.