A panel created by Gov. Quinn has issued a report it says can save Illinois taxpayers more than $500 million a year.
House Speaker Michael Madigan is predicting "very significant" layoffs of state workers because of budget problems.
Madigan made his comments after he and other legislative leaders met Thursday with Gov. Pat Quinn to try to hammer out a new deal.
Lawmakers ended their spring session last weekend by passing a state budget that doesn't fully fund government expenses. Quinn is meeting with the leaders to try to fix that.
Quinn remained optimistic lawmakers would pass the income tax increase he wants to raise more revenue, but that idea took a back seat. Lawmakers instead focused on moneysaving moves like raising the state employee retirement age and slashing government jobs.
Senate President John Cullerton says that even after cuts are made, the state will still need more money and he called a tax hike "inevitable." Cullerton's Senate approved a tax increase, but the Illinois House didn't.
Quinn and leaders are expected to meet again next Tuesday to talk more about the budget.