Illinois House Approves Income Tax Hike, Spending Plan

A spending plan and a measure to raise the state’s income tax passed the Illinois House on Sunday, a major development in ongoing negotiations in Springfield to end the historic budget impasse.

Lawmakers voted for the tax increase 72 to 45 and the appropriations bill 81 to 34, on the second day of the state's third straight fiscal year without a budget – a stalemate that has left Illinois with a $6.2 billion annual deficit and a $14.7 billion backlog of overdue bills.

If it becomes law, the hike would permanently increase the personal income tax rate by 32 percent, from 3.75 percent to 4.95 percent, while the corporate tax rate would go from 5.25 percent to 7 percent.

Both increases are similar to a tax proposal that passed the Illinois Senate in May, and are projected to raise roughly $5 billion in revenue.

The measure would restore both rates to almost exactly where they were before the temporary, four-year increase was allowed to expire in 2015.

The bills, needing 71 votes to pass, received some Republican support, despite objections over both the burden on taxpayers, as well as an additional amendment Democrats introduced to the spending plan that was previously adopted in a bipartisan vote on Friday.

House Republicans met privately to discuss the last-minute changes to the more than $36 billion spending plan before voting Sunday, with Minority Leader Jim Durkin reportedly calling the introduction of the 638-page amendment without advising his caucus "a sign of bad faith."

"The Democrats made matters more complicated by filing a new spending bill within the last 15 minutes," Durkin told reporters after meeting with his caucus. "We have no idea what’s in it. To take a tax increase vote before knowing what you’re spending on, to me is irresponsible." [[431431973, C]]

The spending proposal was immediately called for a vote following the passage of the revenue package, which received roughly two-and-a-half hours of debate. The spending plan passed after just 20 minutes of discussion. 

"Today, Democrats and Republicans stood together to take a crucial step toward reaching a compromise that ends the budget crisis by passing a fully funded state budget in a bipartisan way," House Speaker Michael Madigan said in a statement.

"While none could say this was an easy decision, it was the right decision; it’s clear that a budget package that cuts billions of dollars in state spending and also provides new revenue is the only path forward," he added. "There is more work to be done, and we will continue working with Republicans to ensure the issues still on the table are fully resolved." 

Originally planning to continue the special legislative session without any votes on Sunday, Madigan reversed course Saturday to schedule a vote following a firestorm of criticism from Republicans in both chambers.

GOP lawmakers decried the Chicago Democrat’s announcement that no bills would be called, with debate boiling over into a brief shouting match on the House floor.

One representative shouted "Speaker junk" as Madigan left, referencing credit agencies’ promise to downgrade Illinois’ bonds to "junk" status without a deal to end the impasse.

Shortly thereafter, Madigan released a statement saying he would call a vote on a revenue package "modeled on the bill supported by the governor."

But Durkin, who voted against both measures, said he had made no deals in the ongoing meetings of the four top legislative leaders. On Sunday, he called the votes "déjà vu all over again."

"What transpired is a repeat of the Illinois Democrats infamous temporary tax of 2011, with the only difference being today’s tax increase is permanent - yes, permanent," the Western Springs Republican said in a statement.

"These votes confirm that the Illinois Democrats will never accept change and are only interested in the status quo – the status quo that placed Illinois in this squalid condition," Durkin continued. "The fight for Illinois families, workers and employers is not over."

Both bills passed Sunday must again clear the Illinois Senate, which is scheduled to convene on Monday, before they may be sent to Republican Gov. Bruce Rauner’s desk.

Shortly after its passage, Rauner announced his plan to veto the income tax increase, citing a lack of reforms in his decision. 

"Illinois families don’t deserve to have more of the hard-earned money taken from them when the legislature has done little to restore confidence in government or grow jobs," Rauner said in a statement. "Illinois families deserve more jobs, property tax relief and term limits. But tonight they got more of the same."

Since taking office in 2015, Rauner has demanded a series of non-budgetary items like a statewide property tax freeze and workers’ compensation reform, among others, in order to agree to a deal to end the impasse.

Without a budget, in addition to the credit downgrade, the state comptroller will soon be unable to cover basic services legally required by court orders, while lottery ticket sales have halted and road construction could soon do the same.

If no agreement is reached, schools across the state will receive no state aid and may be unable to open in the fall.

Illinois is the only state to ever go two years without passing a budget, according to the National Conference of State Legislators.

Copyright AP - Associated Press
Contact Us