SPRINGFIELD - The state would take a bigger chunk out of eachpaycheck and raise cigarette taxes by a buck a pack under a post-election, revenue-boosting plan floated Thursday by IllinoisDemocrats.
The proposed 75 percent hike in the state's 3 percent income taxrate would raise enough money to pay down the state's massivebacklog of bills, while the cigarette tax proceeds would go towardschool programs.
Homeowners would see yearly rebate checks worth an estimated$325.
"We feel all the leaders are on board with this proposal," saidstate Rep. Will Davis, a Chicago Democrat who helped broker theagreement with lawmakers and Gov. Pat Quinn.
Senate President John Cullerton, D-Chicago, acknowledged the plancould change as the hours tick down on the legislation session, butsaid members of his majority appeared to be on board with theconcept.
"This is an outline," Cullerton told reporters Thursday night."There might be some tweaks to it."
The politically charged tax push is aimed at closing a $13billion budget gap that has left thousands of state vendors waitingmonths to get paid. It brought immediate catcalls from Republicans,who said Gov. Pat Quinn had campaigned throughout last year'selection 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 andswitch. I think it's wrong, and it's wrong to do it in a lame ducksession," said Senate Minority Leader Christine Radogno, R-Lemont.
Even if the tax package is OK'd in the House today, the Senateisn't scheduled to return to action until Monday - the same dayQuinn is sworn into office for a four-year term and a day before thenew General Assembly begins. Tax hike supporters hope outgoinglawmakers - known as "lame ducks" - will back an increase becausethey won't have to face voters in 2012.
The income tax would jump from 3 percent to 5.25 percent, withportions of the money earmarked for schools, property tax relief anda borrowing plan. The cigarette tax increase would generate anestimated $377 million for educational programs.
In four years, the income tax rate would drop to 3.25 percent.
Businesses also would pay a total of about $1 billion moreannually, with the corporate tax rate jumping to 8.4 percent, upfrom its current 4.8 percent rate.
Davis said Republicans, many of whom represent areas south ofInterstate 80, should get on board because of the money it willgenerate for programs in their areas.
"We're talking about money for downstate schools," said Davis."Hopefully that will impress upon them enough that they shouldsupport this proposal."
State Sen. Dale Righter, R-Mattoon, characterized the push for atax hike as a "last-minute, lame duck session money-grab by theDemocrat leaders."
"It's taken us a decade to get into this problem. I don't knowwhy we think we need to solve it in two weeks like the Democratleaders apparently intend to do," Righter said.
State Sen. Gary Forby, D-Benton, said he would not support anincrease in the cigarette tax, but would strongly consider votingfor an income tax hike.
"Somehow or other we've got to come up with revenue to pay ourbills," Forby said.
In a flurry of action Thursday, the House and Senate alsoapproved other budget-related items, including:
Medicaid reform
Hoping to squeeze out $770 million in savings over five years,the House and Senate have signed off on changes to the state'sMedicaid program. The proposal aims to move half of the nearly 2.8million low-income and disabled recipients into cheaper managed care-style health insurance plans.
In addition, the proposal places income limits on the All Kidshealth insurance program, limiting most recipients to those residingin households earning less than $66,000.
Amazon' tax
Lawmakers also signed off on House Bill 3659, which is aimed attapping uncollected sales tax revenue from online retailers.
Opponents say the Internet sales tax proposal will end up costingthe state money in lawsuits and lost jobs.
In an example of the manic pace of activity under the StatehouseDome, the House and Senate sponsors couldn't agree on how much moneythe proposal would generate for the state.
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