Posted by Ray Long, Monique Garcia, Bob Secter and Rick Pearson at 12:23 p.m.; last updated at 6:20 p.m.
SPRINGFIELD — Gov. Pat Quinn today called for a 33 percent increase in the state income tax rate to raise money for education and ease deep cuts he’s proposed in his new budget plan.
In his short budget speech to the House and Senate, Quinn argued that an income tax "surcharge" would be enough to restore Illinois’ education budget to current levels and allow the state to get caught up on some of the millions owed to public schools, community colleges and four-year universities.
Quinn wants to increase the personal income tax rate from 3 percent to 4 percent — a 33 percent increase — with the corporate tax rate rising from 4.8 percent to 5.8 percent. The tax hike would bring in $2.8 billion a year.
"I believe this 1 percent for education makes sense, and I think the people of Illinois will understand. We must invest in the future, even in these tough economic times," Quinn said. This is urgent. We don’t have six months. We don’t have six weeks. I challenge the General Assembly to take immediate action to enact the 1 percent for education initiative."
Last year, Quinn unsuccessfully tried to raise the personal income
tax rate from 3 percent to 4.5 percent and provide some tax relief.
The political dynamics for a tax increase have
grown only worse as the election-seeking Democratic governor confronts
campaigning legislators who fear a voter backlash in the Nov. 2 general
election.
Senate President John Cullerton said today that he supports the Quinn tax increase but wants the House to "lead the way."
Cullerton, a Chicago Democrat, noted the Senate passed an income tax increase last year and said that the Senate would be able to pass the new Quinn plan.
"This was the governor’s idea…and I support it," Cullerton said.
House Speaker Michael Madigan said Quinn did an "excellent job" laying out the dimensions of the state’s budget woes, but did not directly say whether he backed the governor’s tax increase. Madigan said he did not know basic details of Quinn’s proposal, such as whether the governor planned to have the tax increase expire.
Madigan said Quinn should be applauded for having the "courage" to propose a tax hike at a time when it might be necessary yet still politically unpopular.
"The people of America don’t want a tax increase," Madigan said on public television’s "Illinois Lawmakers." "They’re hurting…You should admire the governor for having the courage to stand up in these times and say we need to maintain the fiscal integrity of the state."
Though the Democrats control the House, Senate and governor’s mansion, Madigan tried to assign some blame to GOP lawmakers as "non-participating dropouts in the budget process.
"I sincerely hope that every member is prepared to cooperate and do the heavy lifting," Madigan said, referring to upcoming budget negotiations. "I have my doubts."
Quinn’s Republican governor opponent, state Sen. Bill Brady of Bloomington, called the budget proposal "a catastrophe."
"I have never seen a fiscal plan that is such a disaster," said Brady, stressing that he thought more borrowing and tax hikes would only worsen the state’s already bleak economic climate.
"It’s not going to work to bring business investment back to this state and jobs when you send a message that we’re not going to solve our fiscal crisis, we’re going to try to borrow our way out of it with record borrowing….A family, a business, a government can not borrow unless it’s got a plan to pay it back…We can not increase taxes in this state. All we’re going to do is push more jobs out of the state."
The governor’s caustic budget plan, first unveiled by top aides Tuesday, also relies on borrowing billions of dollars to stay afloat and pushing even more debt down
the road. The administration’s hope is to persuade leery lawmakers to instead raise taxes in
an election year.
Quinn aides warned the plan would cost some 13,000 teachers and staff
their jobs, cut off poor seniors from help in paying for costly
prescriptions and shut down some health care programs for the indigent.
But even after about $2 billion in cuts, the state would still be $11
billion in the hole.
Quinn took a shot at a plan offered by his Republican rival for governor, state Sen. Bill Brady, who has proposed 10 percent across the board cuts. Without naming Brady, Quinn said his GOP opponent was offering a plan both “heartless and naïve” that would take a “chainsaw” approach to funding for schools and social services.
Quinn’s plan to downsize his income-tax hike request and focus it on education funding represents a small-step, targeted approach to the state’s massive deficit. Such a plan could motivate the state’s powerful teachers’ unions and other education advocates during the current legislative session, pitting supporting schools against legislative fears of enacting an election-year tax increase.
At the same time, the education tax increase alone would do little toward resolving the state’s $13 billion budget deficit, leaving open the potential for further tax increase discussions between Quinn and legislative leaders following the Nov. 2 general election.
Quinn’s gambit, to propose cuts in education and social services,
represents the latest step in the increasing divergence between the
state’s very real deteriorating fiscal situation and the rhetoric of
politicians who believe the public doesn’t want or trust Springfield to
get any more money from their wallets.
Similar cries about slashing services last year ended up being papered
over by increased borrowing. Many lawmakers privately expect that fears
among rank-and-file lawmakers about a voter revolt will lead to a
repeat of last spring’s session.
By proposing cuts of $1.3 billion in education, all but $94 million
coming from grade and high schools, as well as taking about $300
million away from cities and villages, Quinn may be trying to set the
stage for public anger over the potential of increased local property
taxes — more hated than the state income tax — to take up the slack.
At the same time, with politicians traditionally proclaiming that
education is their top priority, the likelihood of teachers being
pink-slipped in the midst of campaign season would seem doubtful.
Likewise, Chicago Mayor Richard Daley has already turned thumbs-down on
Quinn’s idea to share less state tax revenue with cities.
Though powerful Democratic House Speaker Michael Madigan of Chicago
could control enough votes for a tax increase, he has insisted
Republicans also must vote to share the pain over decades of mismanaged
budgets and underfunded state pensions. Republicans, however, have
little political incentive to back a tax increase and have contended
the excesses were due to six years of budget gimmickry by disgraced
former Gov. Rod Blagojevich and compounded by the Democrats’ one-party
rule of Springfield.
Overall, Quinn’s budget proposal forecasts a $4.7 billion operating
deficit for the budget year that begins July 1, on top of $6 billion of
debt from the current budget. Quinn would borrow to cover the operating
shortfall, which would need to be repaid later on top of the $6 billion
in lingering debt.
At the same time, the state will face the loss of more than $1 billion
in federal money that has been used to prevent cuts in education
funding this year. Quinn’s proposal counts on the federal government
continuing to pay a higher reimbursement rate for health care for the
poor. If that ends as scheduled next December, it would blow a more
than $500 million hole in the budget.
In addition to the proposed education cuts, Quinn would cut half of the
$140 million used to help poor seniors make up for the federal
"doughnut hole" in their Medicare prescription coverage.
Stermer also said there was "an agreement in the works" within the
legislature that would institute a two-tier pension plan with lesser
benefits for future state workers. Such a plan, he said, would provide
up to $300 million in savings in the budget proposal. While pushed by
prominent politicians in both parties, a two-tier system has been
fought by state labor unions.
Though it is likely that lawmakers would significantly revise Quinn’s
proposal, regardless of prospects for a tax increase until after the
fall election, the governor’s administration nodded to public sentiment
to cut government before raising taxes.
At the same time, Quinn appeared to adopt proposals offered by two
rivals for his job in the Feb. 2 primary. Echoing a call by Democratic
Comptroller Dan Hynes, Quinn would review, renegotiate or dump many
costly contracts that were signed under Blagojevich. He also proposed a
tax cut for small businesses that create jobs, while his general
election rival, Republican state Sen. Bill Brady of Bloomington,
proposed a broader tax credit.