Leaders in Springfield appear poised to push for a temporary income tax increase of 2.25 percentage points, in order to help offset the state's massive deficit.
Last night, the Chicago Sun-Times reported that Governor Pat Quinn, Senate Majority Leader John Cullerton and House Speaker Mike Madigan had reached a deal to raise the tax rate from 3 percent to 5.25 percent, only for the next four years.
That would be coupled with a corresponding increase in the corporate tax rate, from 4.8 to 8.4 percent. Lawmakers will also push for a dollar-a-pack increase on cigarette taxes.
In all, the income tax increase is expected to generate $6.2 billion a year, the corporate tax an additional $1 billion, and the cigarette tax $377 million more.
The state will also borrow $12.2 billion, against its expected income tax revenues, to help pay its current past-due bills. As of now, the state owes around $8 billion to service providers, mainly organizations that care for the poor.
The Senate President explained why he was supporting such bold action:
"I think it's the right time to do it because we are in desperate need of paying our bills," Cullerton said. "Just think about how we're going to be after we pass this. We would have all our bills, all those people that are owed money, $8 billion would go back into the economy. People will be paid on time. Our credit rating will be dramatically improved."
Indeed, the measures would close the $15 billion budget gap the state is currently facing. They would also provide additional money for education -- 0.25 percent of the income tax increase, and the entirety of the cigarette tax hike, would be set aside for schools, a total of roughly $700 million.
And a separate provision would all but lock in state spending at current levels, creating a moratorium on new program and allowing a maximum of one percent increase in state spending for the next three years.
At the end of four years, tax rates would be dropped to a permanent level of 3.75 percent, slightly higher than they currently are but also slightly lower than the one-percent increase Governor Quinn was promising on the campaign trail.
Some opposition lawmakers expressed their distaste for the package. From Pantagraph:
[The deal] brought immediate catcalls from Republicans, who said Gov. Pat Quinn had campaigned throughout last year's election on a platform of raising income taxes by just 33 percent.
"This is more than double that. To me, that's kind of a bait and switch. I think it's wrong, and it's wrong to do it in a lame duck session," said Senate Minority Leader Christine Radogno, R-Lemont.
Still, Democrats are hoping to do just that: they're expected to work on the measure today, and possibly try to pass it when they reconvene on Sunday. A new legislature -- with a handful more Republicans -- will be sworn in next Wednesday.